Correlation Between Direxion Daily and NKEQ

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

Diversification Opportunities for Direxion Daily and NKEQ

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Direxion and NKEQ is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily NVDA and NKEQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NKEQ 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 NKEQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NKEQ has no effect on the direction of Direxion Daily i.e., Direxion Daily and NKEQ go up and down completely randomly.

Pair Corralation between Direxion Daily and NKEQ

If you would invest  2,895  in NKEQ on September 12, 2024 and sell it today you would earn a total of  0.00  from holding NKEQ or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy4.55%
ValuesDaily Returns

Direxion Daily NVDA  vs.  NKEQ

 Performance 
       Timeline  
Direxion Daily NVDA 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily NVDA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating fundamental indicators, Direxion Daily unveiled solid returns over the last few months and may actually be approaching a breakup point.
NKEQ 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NKEQ has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, NKEQ is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Direxion Daily and NKEQ Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Direxion Daily and NKEQ

The main advantage of trading using opposite Direxion Daily and NKEQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, NKEQ 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 NKEQ will offset losses from the drop in NKEQ's long position.
The idea behind Direxion Daily NVDA and NKEQ 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.
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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