Correlation Between Betashares Asia and JPMorgan Equity
Can any of the company-specific risk be diversified away by investing in both Betashares Asia 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 Betashares Asia and JPMorgan Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Betashares Asia Technology and JPMorgan Equity Premium, you can compare the effects of market volatilities on Betashares Asia 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 Betashares Asia with a short position of JPMorgan Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Betashares Asia and JPMorgan Equity.
Diversification Opportunities for Betashares Asia and JPMorgan Equity
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Betashares and JPMorgan is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Betashares Asia Technology 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 Betashares Asia 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 Betashares Asia Technology 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 Betashares Asia i.e., Betashares Asia and JPMorgan Equity go up and down completely randomly.
Pair Corralation between Betashares Asia and JPMorgan Equity
Assuming the 90 days trading horizon Betashares Asia Technology is expected to generate 3.27 times more return on investment than JPMorgan Equity. However, Betashares Asia is 3.27 times more volatile than JPMorgan Equity Premium. It trades about 0.05 of its potential returns per unit of risk. JPMorgan Equity Premium is currently generating about 0.11 per unit of risk. If you would invest 874.00 in Betashares Asia Technology on September 1, 2024 and sell it today you would earn a total of 78.00 from holding Betashares Asia Technology or generate 8.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.23% |
| Values | Daily Returns |
Betashares Asia Technology vs. JPMorgan Equity Premium
Performance |
| Timeline |
| Betashares Asia Tech |
| JPMorgan Equity Premium |
Betashares Asia and JPMorgan Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Betashares Asia and JPMorgan Equity
The main advantage of trading using opposite Betashares Asia and JPMorgan Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Betashares Asia 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.| Betashares Asia vs. Betashares Australian Major | Betashares Asia vs. Betashares Wealth Builder | Betashares Asia vs. Betashares Australian Cash | Betashares Asia vs. Betashares Australian Bank |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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