Correlation Between Direxion Daily and Fidelity Investment

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

Diversification Opportunities for Direxion Daily and Fidelity Investment

-0.82

Correlation Coefficient

Direxion Daily  Fidelity Investment

Pay attention - limited upside

The 3 months correlation between Direxion and Fidelity is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily NVDA and Fidelity Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Investment Grade 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 Fidelity Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Investment Grade has no effect on the direction of Direxion Daily i.e., Direxion Daily and Fidelity Investment go up and down completely randomly.

Pair Corralation between Direxion Daily and Fidelity Investment

Given the investment horizon of 90 days Direxion Daily NVDA is expected to under-perform the Fidelity Investment. In addition to that, Direxion Daily is 22.25 times more volatile than Fidelity Investment Grade. It trades about -0.07 of its total potential returns per unit of risk. Fidelity Investment Grade is currently generating about 0.09 per unit of volatility. If you would invest  4,194  in Fidelity Investment Grade on December 30, 2024 and sell it today you would earn a total of  90.00  from holding Fidelity Investment Grade or generate 2.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Direxion Daily NVDA  vs.  Fidelity Investment Grade

Direxion Daily NVDA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Direxion Daily NVDA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Fidelity Investment Grade

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Investment Grade are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Fidelity Investment is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Direxion Daily and Fidelity Investment

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

The idea behind Direxion Daily NVDA and Fidelity Investment Grade 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.