NATO vs. DFEN
NATO (Themes Transatlantic Defense ETF) and DFEN (Direxion Daily Aerospace & Defense Bull 3X Shares) are both exchange-traded funds - NATO is a Aerospace & Defense fund tracking the Solactive Transatlantic Aerospace and Defense Index, while DFEN is a Leveraged Equities fund tracking the Dow Jones U.S. Select Aerospace & Defense Index (300%). Both are passively managed. Over the past year, NATO returned 13.50% vs 59.57% for DFEN. Their correlation of 0.85 suggests significant overlap in exposure. NATO charges 0.35%/yr vs 0.99%/yr for DFEN.
Performance
NATO vs. DFEN - Performance Comparison
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Returns By Period
In the year-to-date period, NATO achieves a 1.39% return, which is significantly lower than DFEN's 2.17% return.
NATO
- 1D
- -1.87%
- 1M
- 2.05%
- YTD
- 1.39%
- 6M
- 7.82%
- 1Y
- 13.50%
- 3Y*
- —
- 5Y*
- —
- 10Y*
- —
DFEN
- 1D
- -4.54%
- 1M
- 12.97%
- YTD
- 2.17%
- 6M
- 21.41%
- 1Y
- 59.57%
- 3Y*
- 63.19%
- 5Y*
- 26.54%
- 10Y*
- —
NATO vs. DFEN - Yearly Performance Comparison
| 2026 (YTD) | 2025 | 2024 | |
|---|---|---|---|
NATO Themes Transatlantic Defense ETF | 1.39% | 50.95% | 0.35% |
DFEN Direxion Daily Aerospace & Defense Bull 3X Shares | 2.17% | 156.62% | -18.28% |
Correlation
The correlation between NATO and DFEN is 0.88, indicating a strong positive relationship between their price movements. Combining them offers limited diversification - they tend to fall together during downturns.
| Correlation | |
|---|---|
Correlation (1Y) Calculated over the trailing 1-year period | 0.88 |
Correlation (All Time) Calculated using the full available price history since Oct 14, 2024 | 0.85 |
The correlation between NATO and DFEN has been stable across timeframes, ranging from 0.85 to 0.88 - a consistent structural relationship.
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Return for Risk
NATO vs. DFEN — Risk / Return Rank
NATO
DFEN
NATO vs. DFEN - Risk-Adjusted Trends Comparison
This table presents a comparison of risk-adjusted performance metrics for Themes Transatlantic Defense ETF (NATO) and Direxion Daily Aerospace & Defense Bull 3X Shares (DFEN). Risk-adjusted metrics are performance indicators that assess an investment's returns in relation to its risk, enabling a more accurate comparison of different investment options.
| NATO | DFEN | Difference | |
|---|---|---|---|
| Sharpe ratioReturn per unit of total volatility | -0.29 | ||
| Sortino ratioReturn per unit of downside risk | -0.52 | ||
| Omega ratioGain probability vs. loss probability | 1.13 | 1.19 | -0.06 |
| Calmar ratioReturn relative to maximum drawdown | 0.85 | 1.43 | -0.59 |
| Martin ratioReturn relative to average drawdown | 2.19 | 3.44 | -1.25 |
Data is calculated on a 1-year rolling basis and updated daily. The trend shows the change in the indicator over the past month. | |||
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Sharpe Ratios by Period
| NATO | DFEN | Difference | |
|---|---|---|---|
Sharpe Ratio (1Y)Calculated over the trailing 1-year period | 0.65 | 0.95 | -0.29 |
Sharpe Ratio (5Y)Calculated over the trailing 5-year period | — | 0.44 | — |
Sharpe Ratio (All Time)Calculated using the full available price history | 1.34 | 0.21 | +1.12 |
Drawdowns
NATO vs. DFEN - Drawdown Comparison
The maximum NATO drawdown since its inception was -15.99%, smaller than the maximum DFEN drawdown of -91.36%. Use the drawdown chart below to compare losses from any high point for NATO and DFEN.
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Drawdown Indicators
| NATO | DFEN | Difference | |
|---|---|---|---|
Max DrawdownLargest peak-to-trough decline | -15.99% | -91.36% | +75.37% |
Max Drawdown (1Y)Largest decline over 1 year | -15.99% | -41.75% | +25.76% |
Max Drawdown (3Y)Largest decline over 3 years | — | -43.13% | — |
Max Drawdown (5Y)Largest decline over 5 years | — | -56.23% | — |
Current DrawdownCurrent decline from peak | -12.30% | -33.04% | +20.74% |
Average DrawdownAverage peak-to-trough decline | -3.71% | -45.27% | +41.56% |
Ulcer IndexDepth and duration of drawdowns from previous peaks | 6.17% | 17.36% | -11.19% |
Volatility
NATO vs. DFEN - Volatility Comparison
The current volatility for Themes Transatlantic Defense ETF (NATO) is 7.97%, while Direxion Daily Aerospace & Defense Bull 3X Shares (DFEN) has a volatility of 22.35%. This indicates that NATO experiences smaller price fluctuations and is considered to be less risky than DFEN based on this measure. The chart below showcases a comparison of their rolling one-month volatility.
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Volatility by Period
| NATO | DFEN | Difference | |
|---|---|---|---|
Volatility (1M)Calculated over the trailing 1-month period | 7.97% | 22.35% | -14.38% |
Volatility (6M)Calculated over the trailing 6-month period | 17.65% | 53.06% | -35.41% |
Volatility (1Y)Calculated over the trailing 1-year period | 20.71% | 63.21% | -42.50% |
Volatility (5Y)Calculated over the trailing 5-year period, annualized | 22.61% | 60.16% | -37.55% |
Volatility (10Y)Calculated over the trailing 10-year period, annualized | 22.61% | 71.48% | -48.87% |
NATO vs. DFEN - Expense Ratio Comparison
NATO has a 0.35% expense ratio, which is lower than DFEN's 0.99% expense ratio.
Dividends
NATO vs. DFEN - Dividend Comparison
NATO's dividend yield for the trailing twelve months is around 0.44%, less than DFEN's 8.74% yield.
| Position | TTM | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 |
|---|---|---|---|---|---|---|---|---|---|---|
DFEN Direxion Daily Aerospace & Defense Bull 3X Shares | 8.74% | 8.89% | 14.12% | 1.13% | 0.46% | 1.89% | 0.48% | 0.50% | 1.07% | 1.50% |
NATO Themes Transatlantic Defense ETF | 0.44% | 0.45% | 0.08% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
Frequently Asked Questions
NATO and DFEN have a correlation of 0.88, meaning they provide meaningful diversification benefit when combined. Depending on your allocation goals, holding both could reduce overall portfolio risk.
DFEN has higher volatility (22.35%) compared to NATO (7.97%). In terms of maximum drawdown, NATO dropped -15.99% vs DFEN's -91.36%.
On 1-year performance, DFEN leads with 59.57% vs 13.50% for NATO. On fees, NATO is cheaper at 0.35% per year. On volatility, NATO has been the lower-risk option at 7.97%. The better choice depends on whether you care most about return, fees, risk, or income.
Over the 1-year period, DFEN has performed better with a 59.57% return vs 13.50%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.
NATO is cheaper with a 0.35% expense ratio, compared with 0.99% for DFEN.
DFEN has the higher dividend yield at 8.74%, compared with 0.44% for NATO.
NATO is categorized as Aerospace & Defense, while DFEN is Leveraged Equities. NATO tracks Solactive Transatlantic Aerospace and Defense Index, while DFEN tracks Dow Jones U.S. Select Aerospace & Defense Index (300%). They also come from different issuers: Themes and Direxion. Their fees differ too: 0.35% for NATO and 0.99% for DFEN.
DFEN currently has the higher Sharpe Ratio (0.95 vs 0.65), meaning it's delivered slightly more return per unit of risk over the trailing 12 months. However, this ranking shifts over time - use the Risk/Return Score above for a more comprehensive view that combines Sharpe, Sortino, and other measures used by quantitative funds.
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