Correlation Between Direxion Daily and Fidelity Real

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

Diversification Opportunities for Direxion Daily and Fidelity Real

-0.16

Correlation Coefficient

Direxion Daily  Fidelity Real

Good diversification

The 3 months correlation between Direxion and Fidelity is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily NVDA and Fidelity Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Real Estate 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 Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Real Estate has no effect on the direction of Direxion Daily i.e., Direxion Daily and Fidelity Real go up and down completely randomly.

Pair Corralation between Direxion Daily and Fidelity Real

Given the investment horizon of 90 days Direxion Daily is expected to generate 5.5 times less return on investment than Fidelity Real. In addition to that, Direxion Daily is 10.34 times more volatile than Fidelity Real Estate. It trades about 0.01 of its total potential returns per unit of risk. Fidelity Real Estate is currently generating about 0.29 per unit of volatility. If you would invest  2,261  in Fidelity Real Estate on December 5, 2024 and sell it today you would earn a total of  99.00  from holding Fidelity Real Estate or generate 4.38% return on investment over 90 days.

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

Direxion Daily NVDA  vs.  Fidelity Real Estate

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 Real Estate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Fidelity Real is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Direxion Daily and Fidelity Real

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

The idea behind Direxion Daily NVDA and Fidelity Real Estate 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.