Correlation Between Direxion Monthly and American Funds
Can any of the company-specific risk be diversified away by investing in both Direxion Monthly and American Funds 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 Monthly and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Monthly Nasdaq 100 and American Funds International, you can compare the effects of market volatilities on Direxion Monthly and American Funds 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 Monthly with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Monthly and American Funds.
Diversification Opportunities for Direxion Monthly and American Funds
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Direxion and American is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Monthly Nasdaq 100 and American Funds International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Inter and Direxion Monthly 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 Monthly Nasdaq 100 are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Inter has no effect on the direction of Direxion Monthly i.e., Direxion Monthly and American Funds go up and down completely randomly.
Pair Corralation between Direxion Monthly and American Funds
Assuming the 90 days horizon Direxion Monthly is expected to generate 6.33 times less return on investment than American Funds. In addition to that, Direxion Monthly is 2.71 times more volatile than American Funds International. It trades about 0.01 of its total potential returns per unit of risk. American Funds International is currently generating about 0.22 per unit of volatility. If you would invest 1,639 in American Funds International on October 23, 2024 and sell it today you would earn a total of 49.00 from holding American Funds International or generate 2.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Direxion Monthly Nasdaq 100 vs. American Funds International
Performance |
| Timeline |
| Direxion Monthly Nasdaq |
| American Funds Inter |
Direxion Monthly and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Monthly and American Funds
The main advantage of trading using opposite Direxion Monthly and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Monthly position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Direxion Monthly vs. Direxion Monthly Sp | Direxion Monthly vs. Direxion Monthly Small | Direxion Monthly vs. Nasdaq 100 2x Strategy | Direxion Monthly vs. Nasdaq 100 2x Strategy |
| American Funds vs. Franklin Small Cap | American Funds vs. Touchstone Small Cap | American Funds vs. Qs Small Capitalization | American Funds vs. Vy Columbia Small |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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