Correlation Between Nuveen ESG and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both Nuveen ESG and Direxion Daily 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 Nuveen ESG and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen ESG Mid Cap and Direxion Daily Mid, you can compare the effects of market volatilities on Nuveen ESG and Direxion Daily 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 Nuveen ESG with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen ESG and Direxion Daily.
Diversification Opportunities for Nuveen ESG and Direxion Daily
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nuveen and Direxion is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen ESG Mid Cap and Direxion Daily Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily Mid and Nuveen ESG 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 Nuveen ESG Mid Cap are associated (or correlated) with Direxion Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Daily Mid has no effect on the direction of Nuveen ESG i.e., Nuveen ESG and Direxion Daily go up and down completely randomly.
Pair Corralation between Nuveen ESG and Direxion Daily
Given the investment horizon of 90 days Nuveen ESG Mid Cap is expected to generate 0.31 times more return on investment than Direxion Daily. However, Nuveen ESG Mid Cap is 3.22 times less risky than Direxion Daily. It trades about -0.1 of its potential returns per unit of risk. Direxion Daily Mid is currently generating about -0.1 per unit of risk. 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 |
Nuveen ESG Mid Cap vs. Direxion Daily Mid
Performance |
| Timeline |
| Nuveen ESG Mid |
| Direxion Daily Mid |
Nuveen ESG and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen ESG and Direxion Daily
The main advantage of trading using opposite Nuveen ESG and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen ESG position performs unexpectedly, Direxion Daily 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 Direxion Daily will offset losses from the drop in Direxion Daily's long position.| 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 |
| Direxion Daily vs. Direxion Daily Retail | Direxion Daily vs. Direxion Daily Industrials | Direxion Daily vs. Direxion Daily Transportation | Direxion Daily vs. Direxion Daily FTSE |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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