Correlation Between Australian High and JPMorgan Global
Can any of the company-specific risk be diversified away by investing in both Australian High and JPMorgan Global 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 Australian High and JPMorgan Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian High Interest and JPMorgan Global Research, you can compare the effects of market volatilities on Australian High and JPMorgan Global 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 Australian High with a short position of JPMorgan Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian High and JPMorgan Global.
Diversification Opportunities for Australian High and JPMorgan Global
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Australian and JPMorgan is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Australian High Interest and JPMorgan Global Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Global Research and Australian High 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 Australian High Interest are associated (or correlated) with JPMorgan Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Global Research has no effect on the direction of Australian High i.e., Australian High and JPMorgan Global go up and down completely randomly.
Pair Corralation between Australian High and JPMorgan Global
Assuming the 90 days trading horizon Australian High is expected to generate 5.78 times less return on investment than JPMorgan Global. But when comparing it to its historical volatility, Australian High Interest is 40.36 times less risky than JPMorgan Global. It trades about 0.91 of its potential returns per unit of risk. JPMorgan Global Research is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 5,017 in JPMorgan Global Research on September 12, 2024 and sell it today you would earn a total of 1,500 from holding JPMorgan Global Research or generate 29.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 71.69% |
| Values | Daily Returns |
Australian High Interest vs. JPMorgan Global Research
Performance |
| Timeline |
| Australian High Interest |
| JPMorgan Global Research |
Australian High and JPMorgan Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian High and JPMorgan Global
The main advantage of trading using opposite Australian High and JPMorgan Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian High position performs unexpectedly, JPMorgan Global 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 Global will offset losses from the drop in JPMorgan Global's long position.The idea behind Australian High Interest and JPMorgan Global Research 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.| JPMorgan Global vs. Betashares Asia Technology | JPMorgan Global vs. BetaShares Australia 200 | JPMorgan Global vs. Australian High Interest | JPMorgan Global vs. Vanguard Global Infrastructure |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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