Correlation Between Direxion Daily and JPMorgan Chase

Can any of the company-specific risk be diversified away by investing in both Direxion Daily and JPMorgan Chase 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 JPMorgan Chase into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Direxion Daily Semiconductor and JPMorgan Chase Co, you can compare the effects of market volatilities on Direxion Daily and JPMorgan Chase 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 JPMorgan Chase. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and JPMorgan Chase.

Diversification Opportunities for Direxion Daily and JPMorgan Chase

0.62

Correlation Coefficient

Direxion Daily  JPMorgan Chase

Poor diversification

The 3 months correlation between Direxion and JPMorgan is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Semiconductor and JPMorgan Chase Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Chase 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 Semiconductor are associated (or correlated) with JPMorgan Chase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Chase has no effect on the direction of Direxion Daily i.e., Direxion Daily and JPMorgan Chase go up and down completely randomly.

Pair Corralation between Direxion Daily and JPMorgan Chase

Given the investment horizon of 90 days Direxion Daily Semiconductor is expected to under-perform the JPMorgan Chase. In addition to that, Direxion Daily is 3.43 times more volatile than JPMorgan Chase Co. It trades about -0.13 of its total potential returns per unit of risk. JPMorgan Chase Co is currently generating about -0.05 per unit of volatility. If you would invest  19,779  in JPMorgan Chase Co on January 30, 2024 and sell it today you would lose (430.00) from holding JPMorgan Chase Co or give up 2.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Direxion Daily Semiconductor  vs.  JPMorgan Chase Co

Direxion Daily Semic

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily Semiconductor are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Direxion Daily disclosed solid returns over the last few months and may actually be approaching a breakup point.

JPMorgan Chase

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, JPMorgan Chase may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Direxion Daily and JPMorgan Chase

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

The idea behind Direxion Daily Semiconductor and JPMorgan Chase Co 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.