Correlation Between Direxion Daily and Nuveen ESG
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Nuveen ESG 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 ESG 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 ESG Mid Cap, you can compare the effects of market volatilities on Direxion Daily and Nuveen ESG 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 ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Nuveen ESG.
Diversification Opportunities for Direxion Daily and Nuveen ESG
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Direxion and Nuveen is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Nuveen ESG Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen ESG Mid 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 ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen ESG Mid has no effect on the direction of Direxion Daily i.e., Direxion Daily and Nuveen ESG go up and down completely randomly.
Pair Corralation between Direxion Daily and Nuveen ESG
Given the investment horizon of 90 days Direxion Daily Mid is expected to under-perform the Nuveen ESG. In addition to that, Direxion Daily is 3.22 times more volatile than Nuveen ESG Mid Cap. It trades about -0.1 of its total potential returns per unit of risk. Nuveen ESG Mid Cap is currently generating about -0.1 per unit of volatility. If you would invest 3,756 in Nuveen ESG Mid Cap on October 26, 2024 and sell it today you would lose (129.00) from holding Nuveen ESG Mid Cap or give up 3.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Mid vs. Nuveen ESG Mid Cap
Performance |
| Timeline |
| Direxion Daily Mid |
| Nuveen ESG Mid |
Direxion Daily and Nuveen ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Nuveen ESG
The main advantage of trading using opposite Direxion Daily and Nuveen ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Nuveen ESG 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 ESG will offset losses from the drop in Nuveen ESG'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 |
| Nuveen ESG vs. Nuveen ESG Small Cap | Nuveen ESG vs. Nuveen ESG Mid Cap | Nuveen ESG vs. Nuveen ESG Large Cap | Nuveen ESG vs. Nuveen ESG Large Cap |
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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