Correlation Between Aquagold International and Direxion Daily

Can any of the company-specific risk be diversified away by investing in both Aquagold International and Direxion Daily 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 Aquagold International and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aquagold International and Direxion Daily MSCI, you can compare the effects of market volatilities on Aquagold International and Direxion Daily 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 Aquagold International with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and Direxion Daily.

Diversification Opportunities for Aquagold International and Direxion Daily

-0.67

Correlation Coefficient

Aquagold International  Direxion Daily

Excellent diversification

The 3 months correlation between Aquagold and Direxion is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Direxion Daily MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily MSCI and Aquagold International 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 Aquagold International are associated (or correlated) with Direxion Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Daily MSCI has no effect on the direction of Aquagold International i.e., Aquagold International and Direxion Daily go up and down completely randomly.

Pair Corralation between Aquagold International and Direxion Daily

Given the investment horizon of 90 days Aquagold International is expected to generate 2.1 times more return on investment than Direxion Daily. However, Aquagold International is 2.1 times more volatile than Direxion Daily MSCI. It trades about 0.0 of its potential returns per unit of risk. Direxion Daily MSCI is currently generating about -0.02 per unit of risk. If you would invest  1.60  in Aquagold International on February 3, 2024 and sell it today you would lose (1.00) from holding Aquagold International or give up 62.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

Aquagold International  vs.  Direxion Daily MSCI

Aquagold International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aquagold International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Aquagold International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Direxion Daily MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Direxion Daily MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Etf's fundamental indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with Aquagold International and Direxion Daily

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

The idea behind Aquagold International and Direxion Daily MSCI 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .