Correlation Between Direxion Daily and Franklin Strategic
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Franklin Strategic 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 Franklin Strategic 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 Franklin Strategic Series, you can compare the effects of market volatilities on Direxion Daily and Franklin Strategic 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 Franklin Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Franklin Strategic.
Diversification Opportunities for Direxion Daily and Franklin Strategic
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Direxion and Franklin is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Franklin Strategic Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Strategic Series 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 Franklin Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Strategic Series has no effect on the direction of Direxion Daily i.e., Direxion Daily and Franklin Strategic go up and down completely randomly.
Pair Corralation between Direxion Daily and Franklin Strategic
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 10.46 times more return on investment than Franklin Strategic. However, Direxion Daily is 10.46 times more volatile than Franklin Strategic Series. It trades about 0.11 of its potential returns per unit of risk. Franklin Strategic Series is currently generating about 0.2 per unit of risk. If you would invest 3,022 in Direxion Daily Mid on September 6, 2024 and sell it today you would earn a total of 3,640 from holding Direxion Daily Mid or generate 120.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Direxion Daily Mid vs. Franklin Strategic Series
Performance |
Timeline |
Direxion Daily Mid |
Franklin Strategic Series |
Direxion Daily and Franklin Strategic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Direxion Daily and Franklin Strategic
The main advantage of trading using opposite Direxion Daily and Franklin Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Franklin Strategic 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 Franklin Strategic will offset losses from the drop in Franklin Strategic'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 |
Franklin Strategic vs. Jhancock Short Duration | Franklin Strategic vs. Astor Longshort Fund | Franklin Strategic vs. Barings Active Short | Franklin Strategic vs. Quantitative Longshort Equity |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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