Correlation Between Absolute Convertible and Jpmorgan Equity
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible 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 Absolute Convertible and Jpmorgan Equity 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 Equity Income, you can compare the effects of market volatilities on Absolute Convertible 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 Absolute Convertible with a short position of Jpmorgan Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Jpmorgan Equity.
Diversification Opportunities for Absolute Convertible and Jpmorgan Equity
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Absolute and Jpmorgan is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Jpmorgan Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Equity Income 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 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 Income has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Jpmorgan Equity go up and down completely randomly.
Pair Corralation between Absolute Convertible and Jpmorgan Equity
Assuming the 90 days horizon Absolute Convertible is expected to generate 6.2 times less return on investment than Jpmorgan Equity. But when comparing it to its historical volatility, Absolute Convertible Arbitrage is 15.39 times less risky than Jpmorgan Equity. It trades about 0.45 of its potential returns per unit of risk. Jpmorgan Equity Income is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,487 in Jpmorgan Equity Income on August 29, 2024 and sell it today you would earn a total of 139.00 from holding Jpmorgan Equity Income or generate 5.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.67% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Jpmorgan Equity Income
Performance |
| Timeline |
| Absolute Convertible |
| Jpmorgan Equity Income |
Absolute Convertible and Jpmorgan Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Jpmorgan Equity
The main advantage of trading using opposite Absolute Convertible and Jpmorgan Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible 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.| Absolute Convertible vs. Calamos Market Neutral | Absolute Convertible vs. Calamos Market Neutral | Absolute Convertible vs. Calamos Market Neutral | Absolute Convertible vs. Calamos Market Neutral |
| Jpmorgan Equity vs. Absolute Convertible Arbitrage | Jpmorgan Equity vs. Allianzgi Convertible Income | Jpmorgan Equity vs. Putnam Convertible Incm Gwth | Jpmorgan Equity vs. Calamos Dynamic Convertible |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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