Correlation Between Direxion Monthly and Leland Thomson
Can any of the company-specific risk be diversified away by investing in both Direxion Monthly and Leland Thomson 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 Leland Thomson 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 Leland Thomson Reuters, you can compare the effects of market volatilities on Direxion Monthly and Leland Thomson 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 Leland Thomson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Monthly and Leland Thomson.
Diversification Opportunities for Direxion Monthly and Leland Thomson
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Direxion and Leland is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Monthly Nasdaq 100 and Leland Thomson Reuters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leland Thomson Reuters 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 Leland Thomson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leland Thomson Reuters has no effect on the direction of Direxion Monthly i.e., Direxion Monthly and Leland Thomson go up and down completely randomly.
Pair Corralation between Direxion Monthly and Leland Thomson
Assuming the 90 days horizon Direxion Monthly Nasdaq 100 is expected to generate 1.23 times more return on investment than Leland Thomson. However, Direxion Monthly is 1.23 times more volatile than Leland Thomson Reuters. It trades about 0.1 of its potential returns per unit of risk. Leland Thomson Reuters is currently generating about 0.09 per unit of risk. If you would invest 3,757 in Direxion Monthly Nasdaq 100 on August 29, 2024 and sell it today you would earn a total of 5,408 from holding Direxion Monthly Nasdaq 100 or generate 143.94% 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. Leland Thomson Reuters
Performance |
| Timeline |
| Direxion Monthly Nasdaq |
| Leland Thomson Reuters |
Direxion Monthly and Leland Thomson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Monthly and Leland Thomson
The main advantage of trading using opposite Direxion Monthly and Leland Thomson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Monthly position performs unexpectedly, Leland Thomson 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 Leland Thomson will offset losses from the drop in Leland Thomson's 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 |
| Leland Thomson vs. Direxion Monthly Nasdaq 100 | Leland Thomson vs. Nasdaq 100 2x Strategy | Leland Thomson vs. Nasdaq 100 2x Strategy | Leland Thomson vs. Ultranasdaq 100 Profund Ultranasdaq 100 |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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