Correlation Between Direxion and Pacer Nasdaq
Can any of the company-specific risk be diversified away by investing in both Direxion and Pacer Nasdaq 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 and Pacer Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion and Pacer Nasdaq International, you can compare the effects of market volatilities on Direxion and Pacer Nasdaq 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 with a short position of Pacer Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion and Pacer Nasdaq.
Diversification Opportunities for Direxion and Pacer Nasdaq
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Direxion and Pacer is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Direxion and Pacer Nasdaq International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Nasdaq Interna and Direxion 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 are associated (or correlated) with Pacer Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Nasdaq Interna has no effect on the direction of Direxion i.e., Direxion and Pacer Nasdaq go up and down completely randomly.
Pair Corralation between Direxion and Pacer Nasdaq
If you would invest 1,275 in Direxion on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Direxion or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Direxion vs. Pacer Nasdaq International
Performance |
| Timeline |
| Direxion |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Pacer Nasdaq Interna |
Direxion and Pacer Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion and Pacer Nasdaq
The main advantage of trading using opposite Direxion and Pacer Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion position performs unexpectedly, Pacer Nasdaq 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 Pacer Nasdaq will offset losses from the drop in Pacer Nasdaq's long position.The idea behind Direxion and Pacer Nasdaq International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Pacer Nasdaq vs. iShares ESG Aggregate | Pacer Nasdaq vs. SPDR MSCI Emerging | Pacer Nasdaq vs. Aquagold International | Pacer Nasdaq vs. Thrivent High Yield |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |