Correlation Between Direxion Daily and John Hancock

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Can any of the company-specific risk be diversified away by investing in both Direxion Daily and John Hancock 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 John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily NVDA and John Hancock Exchange Traded, you can compare the effects of market volatilities on Direxion Daily and John Hancock 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 John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and John Hancock.

Diversification Opportunities for Direxion Daily and John Hancock

-0.87
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Direxion and John is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily NVDA and John Hancock Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock 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 NVDA are associated (or correlated) with John Hancock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Hancock Exchange has no effect on the direction of Direxion Daily i.e., Direxion Daily and John Hancock go up and down completely randomly.

Pair Corralation between Direxion Daily and John Hancock

Given the investment horizon of 90 days Direxion Daily NVDA is expected to generate 15.13 times more return on investment than John Hancock. However, Direxion Daily is 15.13 times more volatile than John Hancock Exchange Traded. It trades about 0.16 of its potential returns per unit of risk. John Hancock Exchange Traded is currently generating about -0.02 per unit of risk. If you would invest  7,573  in Direxion Daily NVDA on September 2, 2024 and sell it today you would earn a total of  4,040  from holding Direxion Daily NVDA or generate 53.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Direxion Daily NVDA  vs.  John Hancock Exchange Traded

 Performance 
       Timeline  
Direxion Daily NVDA 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily NVDA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Direxion Daily unveiled solid returns over the last few months and may actually be approaching a breakup point.
John Hancock Exchange 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days John Hancock Exchange Traded has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, John Hancock is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Direxion Daily and John Hancock Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Direxion Daily and John Hancock

The main advantage of trading using opposite Direxion Daily and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, John Hancock 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 John Hancock will offset losses from the drop in John Hancock's long position.
The idea behind Direxion Daily NVDA and John Hancock Exchange Traded 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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