Correlation Between Ultra Nasdaq-100 and Direxion Monthly
Can any of the company-specific risk be diversified away by investing in both Ultra Nasdaq-100 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 Ultra Nasdaq-100 and Direxion Monthly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ultra Nasdaq 100 Profunds and Direxion Monthly Nasdaq 100, you can compare the effects of market volatilities on Ultra Nasdaq-100 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 Ultra Nasdaq-100 with a short position of Direxion Monthly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Nasdaq-100 and Direxion Monthly.
Diversification Opportunities for Ultra Nasdaq-100 and Direxion Monthly
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ultra and Direxion is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Nasdaq 100 Profunds 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 Ultra Nasdaq-100 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 Ultra Nasdaq 100 Profunds 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 Ultra Nasdaq-100 i.e., Ultra Nasdaq-100 and Direxion Monthly go up and down completely randomly.
Pair Corralation between Ultra Nasdaq-100 and Direxion Monthly
Assuming the 90 days horizon Ultra Nasdaq 100 Profunds is expected to generate 1.16 times more return on investment than Direxion Monthly. However, Ultra Nasdaq-100 is 1.16 times more volatile than Direxion Monthly Nasdaq 100. It trades about 0.13 of its potential returns per unit of risk. Direxion Monthly Nasdaq 100 is currently generating about 0.13 per unit of risk. If you would invest 10,626 in Ultra Nasdaq 100 Profunds on August 24, 2024 and sell it today you would earn a total of 645.00 from holding Ultra Nasdaq 100 Profunds or generate 6.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ultra Nasdaq 100 Profunds vs. Direxion Monthly Nasdaq 100
Performance |
| Timeline |
| Ultra Nasdaq 100 |
| Direxion Monthly Nasdaq |
Ultra Nasdaq-100 and Direxion Monthly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Nasdaq-100 and Direxion Monthly
The main advantage of trading using opposite Ultra Nasdaq-100 and Direxion Monthly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Nasdaq-100 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.| Ultra Nasdaq-100 vs. Nasdaq 100 2x Strategy | Ultra Nasdaq-100 vs. Nasdaq 100 2x Strategy | Ultra Nasdaq-100 vs. Nasdaq 100 2x Strategy | Ultra Nasdaq-100 vs. Ultranasdaq 100 Profund Ultranasdaq 100 |
| Direxion Monthly vs. Direxion Monthly Sp | Direxion Monthly vs. Direxion Monthly Small | Direxion Monthly vs. Nasdaq 100 2x Strategy | Direxion Monthly vs. Nasdaq 100 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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