Correlation Between Direxion Daily and JP Morgan
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and JP Morgan 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 JP Morgan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily Regional and JP Morgan Exchange, you can compare the effects of market volatilities on Direxion Daily and JP Morgan 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 JP Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and JP Morgan.
Diversification Opportunities for Direxion Daily and JP Morgan
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Direxion and BBLB is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Regional and JP Morgan Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JP Morgan Exchange 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 Regional are associated (or correlated) with JP Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JP Morgan Exchange has no effect on the direction of Direxion Daily i.e., Direxion Daily and JP Morgan go up and down completely randomly.
Pair Corralation between Direxion Daily and JP Morgan
Given the investment horizon of 90 days Direxion Daily Regional is expected to under-perform the JP Morgan. In addition to that, Direxion Daily is 4.93 times more volatile than JP Morgan Exchange. It trades about -0.19 of its total potential returns per unit of risk. JP Morgan Exchange is currently generating about 0.12 per unit of volatility. If you would invest 8,344 in JP Morgan Exchange on November 27, 2024 and sell it today you would earn a total of 152.00 from holding JP Morgan Exchange or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Regional vs. JP Morgan Exchange
Performance |
| Timeline |
| Direxion Daily Regional |
| JP Morgan Exchange |
Direxion Daily and JP Morgan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and JP Morgan
The main advantage of trading using opposite Direxion Daily and JP Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, JP Morgan 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 JP Morgan will offset losses from the drop in JP Morgan's long position.| Direxion Daily vs. Direxion Daily Homebuilders | Direxion Daily vs. Direxion Daily Retail | Direxion Daily vs. Direxion Daily Transportation | Direxion Daily vs. Direxion Daily Aerospace |
| JP Morgan vs. Vanguard 0 3 Month | JP Morgan vs. Global X Funds | JP Morgan vs. Vanguard Ultra Short Treasury | JP Morgan vs. US Treasury 12 |
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.
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