Correlation Between Direxion Monthly and Ultranasdaq 100

Can any of the company-specific risk be diversified away by investing in both Direxion Monthly and Ultranasdaq 100 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 Monthly and Ultranasdaq 100 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Direxion Monthly Nasdaq 100 and Ultranasdaq 100 Profund Ultranasdaq 100, you can compare the effects of market volatilities on Direxion Monthly and Ultranasdaq 100 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 Monthly with a short position of Ultranasdaq 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Monthly and Ultranasdaq 100.

Diversification Opportunities for Direxion Monthly and Ultranasdaq 100

1.0

Correlation Coefficient

Direxion Monthly  Ultranasdaq 100

No risk reduction

The 3 months correlation between Direxion and Ultranasdaq is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Monthly Nasdaq 100 and Ultranasdaq 100 Profund Ultran in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultranasdaq 100 Profund and Direxion Monthly 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 Monthly Nasdaq 100 are associated (or correlated) with Ultranasdaq 100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultranasdaq 100 Profund has no effect on the direction of Direxion Monthly i.e., Direxion Monthly and Ultranasdaq 100 go up and down completely randomly.

Pair Corralation between Direxion Monthly and Ultranasdaq 100

Assuming the 90 days horizon Direxion Monthly Nasdaq 100 is expected to generate 0.83 times more return on investment than Ultranasdaq 100. However, Direxion Monthly Nasdaq 100 is 1.2 times less risky than Ultranasdaq 100. It trades about -0.25 of its potential returns per unit of risk. Ultranasdaq 100 Profund Ultranasdaq 100 is currently generating about -0.25 per unit of risk. If you would invest  9,950  in Direxion Monthly Nasdaq 100 on October 17, 2024 and sell it today you would lose (1,050) from holding Direxion Monthly Nasdaq 100 or give up 10.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Direxion Monthly Nasdaq 100  vs.  Ultranasdaq 100 Profund Ultran

Direxion Monthly Nasdaq

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Monthly Nasdaq 100 are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Direxion Monthly is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ultranasdaq 100 Profund

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ultranasdaq 100 Profund Ultranasdaq 100 are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ultranasdaq 100 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Direxion Monthly and Ultranasdaq 100

The main advantage of trading using opposite Direxion Monthly and Ultranasdaq 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Monthly position performs unexpectedly, Ultranasdaq 100 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 Ultranasdaq 100 will offset losses from the drop in Ultranasdaq 100's long position.

The idea behind Direxion Monthly Nasdaq 100 and Ultranasdaq 100 Profund Ultranasdaq 100 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.