Correlation Between Drum Income and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both Drum Income 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 Drum Income and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Drum Income Plus and Direxion Daily SP, you can compare the effects of market volatilities on Drum Income 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 Drum Income with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Drum Income and Direxion Daily.
Diversification Opportunities for Drum Income and Direxion Daily
-0.99 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Drum and Direxion is -0.99. Overlapping area represents the amount of risk that can be diversified away by holding Drum Income Plus and Direxion Daily SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily SP and Drum Income 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 Drum Income Plus 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 SP has no effect on the direction of Drum Income i.e., Drum Income and Direxion Daily go up and down completely randomly.
Pair Corralation between Drum Income and Direxion Daily
Given the investment horizon of 90 days Drum Income Plus is expected to under-perform the Direxion Daily. But the etf apears to be less risky and, when comparing its historical volatility, Drum Income Plus is 1.0 times less risky than Direxion Daily. The etf trades about -0.05 of its potential returns per unit of risk. The Direxion Daily SP is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,361 in Direxion Daily SP on February 21, 2024 and sell it today you would earn a total of 596.00 from holding Direxion Daily SP or generate 17.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Drum Income Plus vs. Direxion Daily SP
Performance |
Timeline |
Drum Income Plus |
Direxion Daily SP |
Drum Income and Direxion Daily Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Drum Income and Direxion Daily
The main advantage of trading using opposite Drum Income and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Drum Income 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.Drum Income vs. First Trust Exchange Traded | Drum Income vs. Westwood Salient Enhanced | Drum Income vs. Horizon Kinetics Medical | Drum Income vs. Harbor Health Care |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
Transaction History View history of all your transactions and understand their impact on performance | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
Global Correlations Find global opportunities by holding instruments from different markets | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |