Correlation Between Direxion Daily and Kovitz Core
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Kovitz Core 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 Kovitz Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily NVDA and Kovitz Core Equity, you can compare the effects of market volatilities on Direxion Daily and Kovitz Core 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 Kovitz Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Kovitz Core.
Diversification Opportunities for Direxion Daily and Kovitz Core
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Direxion and Kovitz is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily NVDA and Kovitz Core Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kovitz Core Equity 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 NVDA are associated (or correlated) with Kovitz Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kovitz Core Equity has no effect on the direction of Direxion Daily i.e., Direxion Daily and Kovitz Core go up and down completely randomly.
Pair Corralation between Direxion Daily and Kovitz Core
Given the investment horizon of 90 days Direxion Daily NVDA is expected to generate 6.63 times more return on investment than Kovitz Core. However, Direxion Daily is 6.63 times more volatile than Kovitz Core Equity. It trades about 0.12 of its potential returns per unit of risk. Kovitz Core Equity is currently generating about 0.1 per unit of risk. If you would invest 2,498 in Direxion Daily NVDA on September 3, 2024 and sell it today you would earn a total of 9,115 from holding Direxion Daily NVDA or generate 364.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 62.22% |
| Values | Daily Returns |
Direxion Daily NVDA vs. Kovitz Core Equity
Performance |
| Timeline |
| Direxion Daily NVDA |
| Kovitz Core Equity |
Direxion Daily and Kovitz Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Kovitz Core
The main advantage of trading using opposite Direxion Daily and Kovitz Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Kovitz Core 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 Kovitz Core will offset losses from the drop in Kovitz Core's long position.| Direxion Daily vs. ProShares Ultra SP500 | Direxion Daily vs. Direxion Daily SP500 | Direxion Daily vs. ProShares Ultra QQQ | Direxion Daily vs. Direxion Daily SP |
| Kovitz Core vs. ProShares Global Listed | Kovitz Core vs. Israel Acquisitions Corp | Kovitz Core vs. Columbia ETF Trust | Kovitz Core vs. Eaton Vance Short |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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