Correlation Between High Yield and Jp Morgan
Can any of the company-specific risk be diversified away by investing in both High Yield and Jp Morgan 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 High Yield and Jp Morgan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Fund R and Jp Morgan Smartretirement, you can compare the effects of market volatilities on High Yield and Jp Morgan 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 High Yield with a short position of Jp Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Yield and Jp Morgan.
Diversification Opportunities for High Yield and Jp Morgan
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between High and JTSQX is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Fund R and Jp Morgan Smartretirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jp Morgan Smartretirement and High Yield 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 High Yield Fund R are associated (or correlated) with Jp Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jp Morgan Smartretirement has no effect on the direction of High Yield i.e., High Yield and Jp Morgan go up and down completely randomly.
Pair Corralation between High Yield and Jp Morgan
Assuming the 90 days horizon High Yield is expected to generate 2.4 times less return on investment than Jp Morgan. But when comparing it to its historical volatility, High Yield Fund R is 2.44 times less risky than Jp Morgan. It trades about 0.1 of its potential returns per unit of risk. Jp Morgan Smartretirement is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,684 in Jp Morgan Smartretirement on September 13, 2024 and sell it today you would earn a total of 704.00 from holding Jp Morgan Smartretirement or generate 41.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Fund R vs. Jp Morgan Smartretirement
Performance |
| Timeline |
| High Yield Fund |
| Jp Morgan Smartretirement |
High Yield and Jp Morgan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Yield and Jp Morgan
The main advantage of trading using opposite High Yield and Jp Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Yield position performs unexpectedly, Jp Morgan 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 Jp Morgan will offset losses from the drop in Jp Morgan's long position.| High Yield vs. High Yield Municipal Fund | High Yield vs. Diversified Bond Fund | High Yield vs. Ginnie Mae Fund | High Yield vs. Utilities Fund Investor |
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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