Correlation Between Direxion Monthly and Nasdaq-100(r)
Can any of the company-specific risk be diversified away by investing in both Direxion Monthly and Nasdaq-100(r) 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 Nasdaq-100(r) into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Monthly Sp and Nasdaq 100 2x Strategy, you can compare the effects of market volatilities on Direxion Monthly and Nasdaq-100(r) 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 Nasdaq-100(r). Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Monthly and Nasdaq-100(r).
Diversification Opportunities for Direxion Monthly and Nasdaq-100(r)
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Direxion and Nasdaq-100(r) is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Monthly Sp and Nasdaq 100 2x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 2x 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 Sp are associated (or correlated) with Nasdaq-100(r). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 2x has no effect on the direction of Direxion Monthly i.e., Direxion Monthly and Nasdaq-100(r) go up and down completely randomly.
Pair Corralation between Direxion Monthly and Nasdaq-100(r)
Assuming the 90 days horizon Direxion Monthly Sp is expected to generate 0.65 times more return on investment than Nasdaq-100(r). However, Direxion Monthly Sp is 1.53 times less risky than Nasdaq-100(r). It trades about 0.16 of its potential returns per unit of risk. Nasdaq 100 2x Strategy is currently generating about 0.07 per unit of risk. If you would invest 7,207 in Direxion Monthly Sp on August 31, 2024 and sell it today you would earn a total of 375.00 from holding Direxion Monthly Sp or generate 5.2% 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 Sp vs. Nasdaq 100 2x Strategy
Performance |
| Timeline |
| Direxion Monthly |
| Nasdaq 100 2x |
Direxion Monthly and Nasdaq-100(r) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Monthly and Nasdaq-100(r)
The main advantage of trading using opposite Direxion Monthly and Nasdaq-100(r) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Monthly position performs unexpectedly, Nasdaq-100(r) 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 Nasdaq-100(r) will offset losses from the drop in Nasdaq-100(r)'s long position.| Direxion Monthly vs. Oppenheimer Gold Special | Direxion Monthly vs. International Investors Gold | Direxion Monthly vs. Gold And Precious | Direxion Monthly vs. Sprott Gold Equity |
| Nasdaq-100(r) vs. Nasdaq 100 2x Strategy | Nasdaq-100(r) vs. Direxion Monthly Nasdaq 100 | Nasdaq-100(r) vs. Ultranasdaq 100 Profund Ultranasdaq 100 | Nasdaq-100(r) vs. Nasdaq 100 2x Strategy |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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