Correlation Between Australian Dairy and JPMorgan Equity
Can any of the company-specific risk be diversified away by investing in both Australian Dairy and JPMorgan Equity 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 Dairy and JPMorgan Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Dairy Farms and JPMorgan Equity Premium, you can compare the effects of market volatilities on Australian Dairy and JPMorgan Equity 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 Dairy with a short position of JPMorgan Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Dairy and JPMorgan Equity.
Diversification Opportunities for Australian Dairy and JPMorgan Equity
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Australian and JPMorgan is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Australian Dairy Farms and JPMorgan Equity Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Equity Premium and Australian Dairy 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 Dairy Farms are associated (or correlated) with JPMorgan Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Equity Premium has no effect on the direction of Australian Dairy i.e., Australian Dairy and JPMorgan Equity go up and down completely randomly.
Pair Corralation between Australian Dairy and JPMorgan Equity
Assuming the 90 days trading horizon Australian Dairy Farms is expected to generate 13.02 times more return on investment than JPMorgan Equity. However, Australian Dairy is 13.02 times more volatile than JPMorgan Equity Premium. It trades about 0.02 of its potential returns per unit of risk. JPMorgan Equity Premium is currently generating about 0.1 per unit of risk. If you would invest 5.20 in Australian Dairy Farms on September 1, 2024 and sell it today you would lose (1.40) from holding Australian Dairy Farms or give up 26.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 78.36% |
| Values | Daily Returns |
Australian Dairy Farms vs. JPMorgan Equity Premium
Performance |
| Timeline |
| Australian Dairy Farms |
| JPMorgan Equity Premium |
Australian Dairy and JPMorgan Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Dairy and JPMorgan Equity
The main advantage of trading using opposite Australian Dairy and JPMorgan Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Dairy position performs unexpectedly, JPMorgan Equity 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 Equity will offset losses from the drop in JPMorgan Equity's long position.| Australian Dairy vs. Leeuwin Metals | Australian Dairy vs. Centaurus Metals | Australian Dairy vs. Retail Food Group | Australian Dairy vs. Diversified United Investment |
| JPMorgan Equity vs. Champion Iron | JPMorgan Equity vs. Australian Dairy Farms | JPMorgan Equity vs. Perpetual Credit Income | JPMorgan Equity vs. Greentech Metals |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |