Correlation Between Direxion Daily and JPMorgan International

Can any of the company-specific risk be diversified away by investing in both Direxion Daily and JPMorgan International 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 International 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 JPMorgan International Value, you can compare the effects of market volatilities on Direxion Daily and JPMorgan International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and JPMorgan International.

Diversification Opportunities for Direxion Daily and JPMorgan International

-0.54

Correlation Coefficient

Direxion Daily  JPMorgan International

Excellent diversification

The 3 months correlation between Direxion and JPMorgan is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Regional and JPMorgan International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan International 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 JPMorgan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan International has no effect on the direction of Direxion Daily i.e., Direxion Daily and JPMorgan International go up and down completely randomly.

Pair Corralation between Direxion Daily and JPMorgan International

Given the investment horizon of 90 days Direxion Daily Regional is expected to under-perform the JPMorgan International. In addition to that, Direxion Daily is 5.12 times more volatile than JPMorgan International Value. It trades about -0.07 of its total potential returns per unit of risk. JPMorgan International Value is currently generating about 0.23 per unit of volatility. If you would invest  5,517  in JPMorgan International Value on December 30, 2024 and sell it today you would earn a total of  698.00  from holding JPMorgan International Value or generate 12.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Direxion Daily Regional  vs.  JPMorgan International Value

Direxion Daily Regional

Risk-Adjusted Performance

Very Weak

Over the last 90 days Direxion Daily Regional has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

JPMorgan International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan International Value are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, JPMorgan International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Direxion Daily and JPMorgan International

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

The idea behind Direxion Daily Regional and JPMorgan International Value 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.