Correlation Between Direxion Monthly and Nova Fund
Can any of the company-specific risk be diversified away by investing in both Direxion Monthly and Nova 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 Nova 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 Nova Fund Class, you can compare the effects of market volatilities on Direxion Monthly and Nova 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 Nova Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Monthly and Nova Fund.
Diversification Opportunities for Direxion Monthly and Nova Fund
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Direxion and NOVA is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Monthly Nasdaq 100 and Nova Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Fund Class 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 Nova Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Fund Class has no effect on the direction of Direxion Monthly i.e., Direxion Monthly and Nova Fund go up and down completely randomly.
Pair Corralation between Direxion Monthly and Nova Fund
Assuming the 90 days horizon Direxion Monthly Nasdaq 100 is expected to generate 1.57 times more return on investment than Nova Fund. However, Direxion Monthly is 1.57 times more volatile than Nova Fund Class. It trades about 0.1 of its potential returns per unit of risk. Nova Fund Class is currently generating about 0.13 per unit of risk. If you would invest 8,591 in Direxion Monthly Nasdaq 100 on August 29, 2024 and sell it today you would earn a total of 574.00 from holding Direxion Monthly Nasdaq 100 or generate 6.68% 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. Nova Fund Class
Performance |
| Timeline |
| Direxion Monthly Nasdaq |
| Nova Fund Class |
Direxion Monthly and Nova Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Monthly and Nova Fund
The main advantage of trading using opposite Direxion Monthly and Nova Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Monthly position performs unexpectedly, Nova 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 Nova Fund will offset losses from the drop in Nova Fund'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 |
| Nova Fund vs. Direxion Monthly Nasdaq 100 | Nova Fund vs. HUMANA INC | Nova Fund vs. Aquagold International | Nova Fund vs. Barloworld Ltd ADR |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |