Correlation Between Direxion Monthly and Precious Metals
Can any of the company-specific risk be diversified away by investing in both Direxion Monthly and Precious Metals 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 Precious Metals 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 Precious Metals Ultrasector, you can compare the effects of market volatilities on Direxion Monthly and Precious Metals 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 Precious Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Monthly and Precious Metals.
Diversification Opportunities for Direxion Monthly and Precious Metals
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between DIREXION and Precious is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Monthly Nasdaq 100 and Precious Metals Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precious Metals Ultr 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 Precious Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precious Metals Ultr has no effect on the direction of Direxion Monthly i.e., Direxion Monthly and Precious Metals go up and down completely randomly.
Pair Corralation between Direxion Monthly and Precious Metals
Assuming the 90 days horizon Direxion Monthly Nasdaq 100 is expected to generate 0.75 times more return on investment than Precious Metals. However, Direxion Monthly Nasdaq 100 is 1.33 times less risky than Precious Metals. It trades about 0.08 of its potential returns per unit of risk. Precious Metals Ultrasector is currently generating about 0.03 per unit of risk. If you would invest 7,667 in Direxion Monthly Nasdaq 100 on September 1, 2024 and sell it today you would earn a total of 1,502 from holding Direxion Monthly Nasdaq 100 or generate 19.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Direxion Monthly Nasdaq 100 vs. Precious Metals Ultrasector
Performance |
| Timeline |
| Direxion Monthly Nasdaq |
| Precious Metals Ultr |
Direxion Monthly and Precious Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Monthly and Precious Metals
The main advantage of trading using opposite Direxion Monthly and Precious Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Monthly position performs unexpectedly, Precious Metals 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 Precious Metals will offset losses from the drop in Precious Metals' 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 |
| Precious Metals vs. Short Real Estate | Precious Metals vs. Short Real Estate | Precious Metals vs. Ultrashort Mid Cap Profund | Precious Metals vs. Ultrashort Mid Cap Profund |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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