Correlation Between Johnson Johnson and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Direxion Daily 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 Johnson Johnson and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and Direxion Daily Travel, you can compare the effects of market volatilities on Johnson Johnson and Direxion Daily 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 Johnson Johnson with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Direxion Daily.
Diversification Opportunities for Johnson Johnson and Direxion Daily
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Johnson and Direxion is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Direxion Daily Travel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily Travel and Johnson Johnson 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 Johnson Johnson are associated (or correlated) with Direxion Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Daily Travel has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Direxion Daily go up and down completely randomly.
Pair Corralation between Johnson Johnson and Direxion Daily
Considering the 90-day investment horizon Johnson Johnson is expected to generate 0.41 times more return on investment than Direxion Daily. However, Johnson Johnson is 2.45 times less risky than Direxion Daily. It trades about 0.41 of its potential returns per unit of risk. Direxion Daily Travel is currently generating about -0.07 per unit of risk. If you would invest 15,168 in Johnson Johnson on November 27, 2024 and sell it today you would earn a total of 1,206 from holding Johnson Johnson or generate 7.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Johnson vs. Direxion Daily Travel
Performance |
| Timeline |
| Johnson Johnson |
| Direxion Daily Travel |
Johnson Johnson and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and Direxion Daily
The main advantage of trading using opposite Johnson Johnson and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Direxion Daily 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 Daily will offset losses from the drop in Direxion Daily's long position.| Johnson Johnson vs. Merck Company | Johnson Johnson vs. Bristol Myers Squibb | Johnson Johnson vs. Amgen Inc | Johnson Johnson vs. Pfizer Inc |
| Direxion Daily vs. Direxion Daily Cloud | Direxion Daily vs. Direxion Daily Cnsmr | Direxion Daily vs. Direxion Daily Transportation | Direxion Daily vs. Direxion Daily Industrials |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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