Correlation Between Direxion Monthly and Value Fund
Can any of the company-specific risk be diversified away by investing in both Direxion Monthly and Value Fund 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 Value Fund 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 Value Fund Value, you can compare the effects of market volatilities on Direxion Monthly and Value Fund 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 Value Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Monthly and Value Fund.
Diversification Opportunities for Direxion Monthly and Value Fund
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between DIREXION and Value is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Monthly Nasdaq 100 and Value Fund Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Fund Value 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 Value Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Fund Value has no effect on the direction of Direxion Monthly i.e., Direxion Monthly and Value Fund go up and down completely randomly.
Pair Corralation between Direxion Monthly and Value Fund
Assuming the 90 days horizon Direxion Monthly Nasdaq 100 is expected to generate 2.37 times more return on investment than Value Fund. However, Direxion Monthly is 2.37 times more volatile than Value Fund Value. It trades about 0.24 of its potential returns per unit of risk. Value Fund Value is currently generating about 0.36 per unit of risk. If you would invest 8,425 in Direxion Monthly Nasdaq 100 on September 1, 2024 and sell it today you would earn a total of 744.00 from holding Direxion Monthly Nasdaq 100 or generate 8.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Monthly Nasdaq 100 vs. Value Fund Value
Performance |
| Timeline |
| Direxion Monthly Nasdaq |
| Value Fund Value |
Direxion Monthly and Value Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Monthly and Value Fund
The main advantage of trading using opposite Direxion Monthly and Value Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Monthly position performs unexpectedly, Value Fund 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 Value Fund will offset losses from the drop in Value Fund's long position.| Direxion Monthly vs. Direxion Monthly Small | Direxion Monthly vs. Nasdaq 100 2x Strategy | Direxion Monthly vs. Nasdaq 100 2x Strategy | Direxion Monthly vs. Ultra Nasdaq 100 Profunds |
| Value Fund vs. Homestead Intermediate Bond | Value Fund vs. Short Term Bond Fund | Value Fund vs. Short Term Government Securities | Value Fund vs. Homestead Rural America |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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