Correlation Between JPMorgan Chase and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase 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 JPMorgan Chase and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JPMorgan Chase Co and Direxion Daily Energy, you can compare the effects of market volatilities on JPMorgan Chase 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 JPMorgan Chase with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and Direxion Daily.
Diversification Opportunities for JPMorgan Chase and Direxion Daily
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JPMorgan and Direxion is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Direxion Daily Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily Energy and JPMorgan Chase 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 JPMorgan Chase Co 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 Energy has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Direxion Daily go up and down completely randomly.
Pair Corralation between JPMorgan Chase and Direxion Daily
Considering the 90-day investment horizon JPMorgan Chase is expected to generate 1.15 times less return on investment than Direxion Daily. In addition to that, JPMorgan Chase is 1.18 times more volatile than Direxion Daily Energy. It trades about 0.19 of its total potential returns per unit of risk. Direxion Daily Energy is currently generating about 0.26 per unit of volatility. If you would invest 6,079 in Direxion Daily Energy on August 28, 2024 and sell it today you would earn a total of 798.00 from holding Direxion Daily Energy or generate 13.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan Chase Co vs. Direxion Daily Energy
Performance |
| Timeline |
| JPMorgan Chase |
| Direxion Daily Energy |
JPMorgan Chase and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Chase and Direxion Daily
The main advantage of trading using opposite JPMorgan Chase and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase 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.| JPMorgan Chase vs. Nu Holdings | JPMorgan Chase vs. HSBC Holdings PLC | JPMorgan Chase vs. Bank of Montreal | JPMorgan Chase vs. Bank of Nova |
| Direxion Daily vs. Direxion Daily SP | Direxion Daily vs. Direxion Daily Semiconductor | Direxion Daily vs. Direxion Daily Semiconductor |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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