Correlation Between Direxion Monthly and Us Strategic

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

Diversification Opportunities for Direxion Monthly and Us Strategic

0.97

Correlation Coefficient

Direxion Monthly  Us Strategic

Almost no diversification

The 3 months correlation between Direxion and RUSTX is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Monthly Nasdaq 100 and Us Strategic Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Strategic Equity 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 Us Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Strategic Equity has no effect on the direction of Direxion Monthly i.e., Direxion Monthly and Us Strategic go up and down completely randomly.

Pair Corralation between Direxion Monthly and Us Strategic

Assuming the 90 days horizon Direxion Monthly Nasdaq 100 is expected to generate 1.74 times more return on investment than Us Strategic. However, Direxion Monthly is 1.74 times more volatile than Us Strategic Equity. It trades about 0.14 of its potential returns per unit of risk. Us Strategic Equity is currently generating about 0.2 per unit of risk. If you would invest  7,207  in Direxion Monthly Nasdaq 100 on August 31, 2024 and sell it today you would earn a total of  808.00  from holding Direxion Monthly Nasdaq 100 or generate 11.21% return on investment 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.  Us Strategic Equity

Direxion Monthly Nasdaq

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Monthly Nasdaq 100 are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Direxion Monthly may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Us Strategic Equity

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Us Strategic Equity are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Us Strategic may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Direxion Monthly and Us Strategic

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

The idea behind Direxion Monthly Nasdaq 100 and Us Strategic Equity 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.