Correlation Between Direxion Daily and John Hancock
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 Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Direxion Daily NVDA vs. John Hancock Exchange Traded
Performance |
Timeline |
Direxion Daily NVDA |
John Hancock Exchange |
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.Direxion Daily vs. Tidal Trust II | Direxion Daily vs. Tidal Trust II | Direxion Daily vs. Direxion Daily META | Direxion Daily vs. Direxion Daily META |
John Hancock vs. SSGA Active Trust | John Hancock vs. BlackRock Intermediate Muni | John Hancock vs. iShares BBB Rated | John Hancock vs. Xtrackers Short Duration |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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