Correlation Between Direxion Daily and Biosyent

Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Biosyent 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 Biosyent 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 Biosyent, you can compare the effects of market volatilities on Direxion Daily and Biosyent 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 Biosyent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Biosyent.

Diversification Opportunities for Direxion Daily and Biosyent

0.62

Correlation Coefficient

Direxion Daily  Biosyent

Poor diversification

The 3 months correlation between Direxion and Biosyent is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Biosyent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biosyent 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 Biosyent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biosyent has no effect on the direction of Direxion Daily i.e., Direxion Daily and Biosyent go up and down completely randomly.

Pair Corralation between Direxion Daily and Biosyent

Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 1.46 times more return on investment than Biosyent. However, Direxion Daily is 1.46 times more volatile than Biosyent. It trades about 0.19 of its potential returns per unit of risk. Biosyent is currently generating about 0.05 per unit of risk. If you would invest  4,925  in Direxion Daily Mid on September 4, 2024 and sell it today you would earn a total of  1,807  from holding Direxion Daily Mid or generate 36.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Direxion Daily Mid  vs.  Biosyent

Direxion Daily Mid

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily Mid are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting fundamental indicators, Direxion Daily unveiled solid returns over the last few months and may actually be approaching a breakup point.

Biosyent

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Biosyent are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Biosyent is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Direxion Daily and Biosyent

The main advantage of trading using opposite Direxion Daily and Biosyent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Biosyent 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 Biosyent will offset losses from the drop in Biosyent's long position.

The idea behind Direxion Daily Mid and Biosyent pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.