Correlation Between Direxion Daily and POWR Lithium
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and POWR Lithium at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Direxion Daily and POWR Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily Mid and POWR Lithium Corp, you can compare the effects of market volatilities on Direxion Daily and POWR Lithium and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Direxion Daily with a short position of POWR Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and POWR Lithium.
Diversification Opportunities for Direxion Daily and POWR Lithium
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Direxion and POWR is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and POWR Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POWR Lithium Corp and Direxion Daily is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Direxion Daily Mid are associated (or correlated) with POWR Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POWR Lithium Corp has no effect on the direction of Direxion Daily i.e., Direxion Daily and POWR Lithium go up and down completely randomly.
Pair Corralation between Direxion Daily and POWR Lithium
Given the investment horizon of 90 days Direxion Daily Mid is expected to under-perform the POWR Lithium. But the etf apears to be less risky and, when comparing its historical volatility, Direxion Daily Mid is 6.98 times less risky than POWR Lithium. The etf trades about 0.0 of its potential returns per unit of risk. The POWR Lithium Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4.23 in POWR Lithium Corp on September 10, 2024 and sell it today you would earn a total of 0.37 from holding POWR Lithium Corp or generate 8.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.24% |
Values | Daily Returns |
Direxion Daily Mid vs. POWR Lithium Corp
Performance |
Timeline |
Direxion Daily Mid |
POWR Lithium Corp |
Direxion Daily and POWR Lithium Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Direxion Daily and POWR Lithium
The main advantage of trading using opposite Direxion Daily and POWR Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, POWR Lithium can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in POWR Lithium will offset losses from the drop in POWR Lithium's long position.Direxion Daily vs. Direxion Daily Retail | Direxion Daily vs. Direxion Daily Industrials | Direxion Daily vs. Direxion Daily Transportation | Direxion Daily vs. Direxion Daily FTSE |
POWR Lithium vs. Awilco Drilling PLC | POWR Lithium vs. Paysafe | POWR Lithium vs. Cabo Drilling Corp | POWR Lithium vs. Noble plc |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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