Correlation Between Direxion Daily and Nuveen Real

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Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Nuveen Real 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 Nuveen Real 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 Nuveen Real Asset, you can compare the effects of market volatilities on Direxion Daily and Nuveen Real 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 Nuveen Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Nuveen Real.

Diversification Opportunities for Direxion Daily and Nuveen Real

-0.3
  Correlation Coefficient

Very good diversification

The 3 months correlation between Direxion and Nuveen is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Nuveen Real Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Real Asset 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 Nuveen Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Real Asset has no effect on the direction of Direxion Daily i.e., Direxion Daily and Nuveen Real go up and down completely randomly.

Pair Corralation between Direxion Daily and Nuveen Real

Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 6.44 times more return on investment than Nuveen Real. However, Direxion Daily is 6.44 times more volatile than Nuveen Real Asset. It trades about 0.05 of its potential returns per unit of risk. Nuveen Real Asset is currently generating about 0.07 per unit of risk. If you would invest  3,403  in Direxion Daily Mid on September 12, 2024 and sell it today you would earn a total of  2,865  from holding Direxion Daily Mid or generate 84.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.8%
ValuesDaily Returns

Direxion Daily Mid  vs.  Nuveen Real Asset

 Performance 
       Timeline  
Direxion Daily Mid 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily Mid are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting fundamental indicators, Direxion Daily unveiled solid returns over the last few months and may actually be approaching a breakup point.
Nuveen Real Asset 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Nuveen Real Asset has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Nuveen Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Direxion Daily and Nuveen Real Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Direxion Daily and Nuveen Real

The main advantage of trading using opposite Direxion Daily and Nuveen Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Nuveen Real 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 Nuveen Real will offset losses from the drop in Nuveen Real's long position.
The idea behind Direxion Daily Mid and Nuveen Real Asset 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.
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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