Correlation Between Dow 2x and Nova Fund
Can any of the company-specific risk be diversified away by investing in both Dow 2x and Nova Fund 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 Dow 2x and Nova Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow 2x Strategy and Nova Fund Class, you can compare the effects of market volatilities on Dow 2x and Nova Fund 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 Dow 2x with a short position of Nova Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow 2x and Nova Fund.
Diversification Opportunities for Dow 2x and Nova Fund
Almost no diversification
The 3 months correlation between Dow and Nova is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Dow 2x Strategy and Nova Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Fund Class and Dow 2x 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 Dow 2x Strategy are associated (or correlated) with Nova Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Fund Class has no effect on the direction of Dow 2x i.e., Dow 2x and Nova Fund go up and down completely randomly.
Pair Corralation between Dow 2x and Nova Fund
Assuming the 90 days horizon Dow 2x Strategy is expected to generate 1.53 times more return on investment than Nova Fund. However, Dow 2x is 1.53 times more volatile than Nova Fund Class. It trades about 0.26 of its potential returns per unit of risk. Nova Fund Class is currently generating about 0.15 per unit of risk. If you would invest 17,418 in Dow 2x Strategy on August 27, 2024 and sell it today you would earn a total of 1,880 from holding Dow 2x Strategy or generate 10.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow 2x Strategy vs. Nova Fund Class
Performance |
| Timeline |
| Dow 2x Strategy |
| Nova Fund Class |
Dow 2x and Nova Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dow 2x and Nova Fund
The main advantage of trading using opposite Dow 2x and Nova Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow 2x position performs unexpectedly, Nova Fund 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 Nova Fund will offset losses from the drop in Nova Fund's long position.| Dow 2x vs. Sp 500 2x | Dow 2x vs. Inverse Dow 2x | Dow 2x vs. Nasdaq 100 2x Strategy | Dow 2x vs. Russell 2000 2x |
| Nova Fund vs. Direxion Monthly Nasdaq 100 | Nova Fund vs. Ultranasdaq 100 Profund Ultranasdaq 100 | Nova Fund vs. Dow 2x Strategy |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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