Correlation Between Nova Fund and Direxion Monthly
Can any of the company-specific risk be diversified away by investing in both Nova Fund and Direxion Monthly 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 Nova Fund and Direxion Monthly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova Fund Class and Direxion Monthly Nasdaq 100, you can compare the effects of market volatilities on Nova Fund and Direxion Monthly 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 Nova Fund with a short position of Direxion Monthly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Fund and Direxion Monthly.
Diversification Opportunities for Nova Fund and Direxion Monthly
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Nova and Direxion is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Nova Fund Class and Direxion Monthly Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Monthly Nasdaq and Nova Fund 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 Nova Fund Class are associated (or correlated) with Direxion Monthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Monthly Nasdaq has no effect on the direction of Nova Fund i.e., Nova Fund and Direxion Monthly go up and down completely randomly.
Pair Corralation between Nova Fund and Direxion Monthly
Assuming the 90 days horizon Nova Fund Class is expected to generate 0.65 times more return on investment than Direxion Monthly. However, Nova Fund Class is 1.54 times less risky than Direxion Monthly. It trades about 0.15 of its potential returns per unit of risk. Direxion Monthly Nasdaq 100 is currently generating about 0.09 per unit of risk. If you would invest 13,048 in Nova Fund Class on August 28, 2024 and sell it today you would earn a total of 525.00 from holding Nova Fund Class or generate 4.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova Fund Class vs. Direxion Monthly Nasdaq 100
Performance |
| Timeline |
| Nova Fund Class |
| Direxion Monthly Nasdaq |
Nova Fund and Direxion Monthly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova Fund and Direxion Monthly
The main advantage of trading using opposite Nova Fund and Direxion Monthly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Fund position performs unexpectedly, Direxion Monthly 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 Monthly will offset losses from the drop in Direxion Monthly's long position.| Nova Fund vs. Direxion Monthly Nasdaq 100 | Nova Fund vs. Ultranasdaq 100 Profund Ultranasdaq 100 | Nova Fund vs. Dow 2x Strategy |
| Direxion Monthly vs. Direxion Monthly Sp | Direxion Monthly vs. Nasdaq 100 2x Strategy | Direxion Monthly vs. Nasdaq 100 2x Strategy | Direxion Monthly vs. Ultra Nasdaq 100 Profunds |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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