Correlation Between Absolute Convertible and Jpmorgan Preferred
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and Jpmorgan Preferred 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 Absolute Convertible and Jpmorgan Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Jpmorgan Preferred And, you can compare the effects of market volatilities on Absolute Convertible and Jpmorgan Preferred 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 Absolute Convertible with a short position of Jpmorgan Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Jpmorgan Preferred.
Diversification Opportunities for Absolute Convertible and Jpmorgan Preferred
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Absolute and Jpmorgan is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Jpmorgan Preferred And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Preferred And and Absolute Convertible 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 Absolute Convertible Arbitrage are associated (or correlated) with Jpmorgan Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Preferred And has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Jpmorgan Preferred go up and down completely randomly.
Pair Corralation between Absolute Convertible and Jpmorgan Preferred
Assuming the 90 days horizon Absolute Convertible is expected to generate 1.8 times less return on investment than Jpmorgan Preferred. But when comparing it to its historical volatility, Absolute Convertible Arbitrage is 3.7 times less risky than Jpmorgan Preferred. It trades about 0.19 of its potential returns per unit of risk. Jpmorgan Preferred And is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 810.00 in Jpmorgan Preferred And on August 25, 2024 and sell it today you would earn a total of 158.00 from holding Jpmorgan Preferred And or generate 19.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Jpmorgan Preferred And
Performance |
| Timeline |
| Absolute Convertible |
| Jpmorgan Preferred And |
Absolute Convertible and Jpmorgan Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Jpmorgan Preferred
The main advantage of trading using opposite Absolute Convertible and Jpmorgan Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, Jpmorgan Preferred 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 Preferred will offset losses from the drop in Jpmorgan Preferred's long position.| Absolute Convertible vs. Absolute Capital Opportunities | Absolute Convertible vs. Invesco Small Cap | Absolute Convertible vs. Vanguard 500 Index | Absolute Convertible vs. Rivernorth Opportunities |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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