Correlation Between Direxion Monthly and Ultra Nasdaq-100
Can any of the company-specific risk be diversified away by investing in both Direxion Monthly and Ultra Nasdaq-100 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 Ultra Nasdaq-100 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 Ultra Nasdaq 100 Profunds, you can compare the effects of market volatilities on Direxion Monthly and Ultra Nasdaq-100 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 Ultra Nasdaq-100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Monthly and Ultra Nasdaq-100.
Diversification Opportunities for Direxion Monthly and Ultra Nasdaq-100
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Direxion and Ultra is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Monthly Nasdaq 100 and Ultra Nasdaq 100 Profunds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Nasdaq 100 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 Ultra Nasdaq-100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultra Nasdaq 100 has no effect on the direction of Direxion Monthly i.e., Direxion Monthly and Ultra Nasdaq-100 go up and down completely randomly.
Pair Corralation between Direxion Monthly and Ultra Nasdaq-100
Assuming the 90 days horizon Direxion Monthly is expected to generate 1.06 times less return on investment than Ultra Nasdaq-100. But when comparing it to its historical volatility, Direxion Monthly Nasdaq 100 is 1.14 times less risky than Ultra Nasdaq-100. It trades about 0.06 of its potential returns per unit of risk. Ultra Nasdaq 100 Profunds is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 9,152 in Ultra Nasdaq 100 Profunds on August 27, 2024 and sell it today you would earn a total of 2,119 from holding Ultra Nasdaq 100 Profunds or generate 23.15% 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. Ultra Nasdaq 100 Profunds
Performance |
| Timeline |
| Direxion Monthly Nasdaq |
| Ultra Nasdaq 100 |
Direxion Monthly and Ultra Nasdaq-100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Monthly and Ultra Nasdaq-100
The main advantage of trading using opposite Direxion Monthly and Ultra Nasdaq-100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Monthly position performs unexpectedly, Ultra Nasdaq-100 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 Ultra Nasdaq-100 will offset losses from the drop in Ultra Nasdaq-100'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 |
| Ultra Nasdaq-100 vs. Short Real Estate | Ultra Nasdaq-100 vs. Short Real Estate | Ultra Nasdaq-100 vs. Large Cap Growth Profund | Ultra Nasdaq-100 vs. Profunds Large Cap Growth |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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