Correlation Between Direxion Daily and NASDAQ Dividend
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and NASDAQ Dividend 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 Daily and NASDAQ Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily Mid and NASDAQ Dividend Achievers, you can compare the effects of market volatilities on Direxion Daily and NASDAQ Dividend 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 Daily with a short position of NASDAQ Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and NASDAQ Dividend.
Diversification Opportunities for Direxion Daily and NASDAQ Dividend
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Direxion and NASDAQ is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and NASDAQ Dividend Achievers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NASDAQ Dividend Achievers and Direxion Daily 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 Daily Mid are associated (or correlated) with NASDAQ Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NASDAQ Dividend Achievers has no effect on the direction of Direxion Daily i.e., Direxion Daily and NASDAQ Dividend go up and down completely randomly.
Pair Corralation between Direxion Daily and NASDAQ Dividend
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 4.47 times more return on investment than NASDAQ Dividend. However, Direxion Daily is 4.47 times more volatile than NASDAQ Dividend Achievers. It trades about 0.19 of its potential returns per unit of risk. NASDAQ Dividend Achievers is currently generating about 0.22 per unit of risk. If you would invest 4,374 in Direxion Daily Mid on September 4, 2024 and sell it today you would earn a total of 2,358 from holding Direxion Daily Mid or generate 53.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.82% |
| Values | Daily Returns |
Direxion Daily Mid vs. NASDAQ Dividend Achievers
Performance |
| Timeline |
Direxion Daily and NASDAQ Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Direxion Daily Mid
Pair trading matchups for Direxion Daily
NASDAQ Dividend Achievers
Pair trading matchups for NASDAQ Dividend
Pair Trading with Direxion Daily and NASDAQ Dividend
The main advantage of trading using opposite Direxion Daily and NASDAQ Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, NASDAQ Dividend 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 Dividend will offset losses from the drop in NASDAQ Dividend's long position.| Direxion Daily vs. Direxion Daily Retail | Direxion Daily vs. Direxion Daily Industrials | Direxion Daily vs. Direxion Daily Transportation | Direxion Daily vs. Direxion Daily FTSE |
| NASDAQ Dividend vs. Starbucks | NASDAQ Dividend vs. Tyson Foods | NASDAQ Dividend vs. Hf Foods Group | NASDAQ Dividend vs. Bridgford Foods |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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