Correlation Between Nationwide Bailard and Direxion Monthly

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

By analyzing existing cross correlation between Nationwide Bailard Technology and Direxion Monthly 7 10, you can compare the effects of market volatilities on Nationwide Bailard 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 Nationwide Bailard with a short position of Direxion Monthly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Bailard and Direxion Monthly.

Diversification Opportunities for Nationwide Bailard and Direxion Monthly

0.48

Correlation Coefficient

Nationwide Bailard  Direxion Monthly

Very weak diversification

The 3 months correlation between Nationwide and Direxion is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Bailard Technology and Direxion Monthly 7 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Monthly 7 and Nationwide Bailard 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 Nationwide Bailard Technology 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 7 has no effect on the direction of Nationwide Bailard i.e., Nationwide Bailard and Direxion Monthly go up and down completely randomly.

Pair Corralation between Nationwide Bailard and Direxion Monthly

Assuming the 90 days horizon Nationwide Bailard Technology is expected to generate 1.18 times more return on investment than Direxion Monthly. However, Nationwide Bailard is 1.18 times more volatile than Direxion Monthly 7 10. It trades about -0.22 of its potential returns per unit of risk. Direxion Monthly 7 10 is currently generating about -0.32 per unit of risk. If you would invest  3,143  in Nationwide Bailard Technology on October 11, 2024 and sell it today you would lose (448.00) from holding Nationwide Bailard Technology or give up 14.25% of portfolio value over 90 days.

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

Nationwide Bailard Technology  vs.  Direxion Monthly 7 10

Nationwide Bailard

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nationwide Bailard Technology has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Direxion Monthly 7

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Direxion Monthly 7 10 has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's essential indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Nationwide Bailard and Direxion Monthly

The main advantage of trading using opposite Nationwide Bailard and Direxion Monthly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Bailard 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.

The idea behind Nationwide Bailard Technology and Direxion Monthly 7 10 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.