Correlation Between JPMorgan BetaBuilders and SPDR Portfolio
Can any of the company-specific risk be diversified away by investing in both JPMorgan BetaBuilders and SPDR Portfolio 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 JPMorgan BetaBuilders and SPDR Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JPMorgan BetaBuilders Europe and SPDR Portfolio Europe, you can compare the effects of market volatilities on JPMorgan BetaBuilders and SPDR Portfolio 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 JPMorgan BetaBuilders with a short position of SPDR Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan BetaBuilders and SPDR Portfolio.
Diversification Opportunities for JPMorgan BetaBuilders and SPDR Portfolio
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between JPMorgan and SPDR is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan BetaBuilders Europe and SPDR Portfolio Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio Europe and JPMorgan BetaBuilders 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 JPMorgan BetaBuilders Europe are associated (or correlated) with SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio Europe has no effect on the direction of JPMorgan BetaBuilders i.e., JPMorgan BetaBuilders and SPDR Portfolio go up and down completely randomly.
Pair Corralation between JPMorgan BetaBuilders and SPDR Portfolio
Given the investment horizon of 90 days JPMorgan BetaBuilders Europe is expected to generate 1.0 times more return on investment than SPDR Portfolio. However, JPMorgan BetaBuilders Europe is 1.0 times less risky than SPDR Portfolio. It trades about 0.05 of its potential returns per unit of risk. SPDR Portfolio Europe is currently generating about 0.05 per unit of risk. If you would invest 5,614 in JPMorgan BetaBuilders Europe on November 3, 2024 and sell it today you would earn a total of 290.00 from holding JPMorgan BetaBuilders Europe or generate 5.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan BetaBuilders Europe vs. SPDR Portfolio Europe
Performance |
| Timeline |
| JPMorgan BetaBuilders |
| SPDR Portfolio Europe |
JPMorgan BetaBuilders and SPDR Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan BetaBuilders and SPDR Portfolio
The main advantage of trading using opposite JPMorgan BetaBuilders and SPDR Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan BetaBuilders position performs unexpectedly, SPDR Portfolio 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 SPDR Portfolio will offset losses from the drop in SPDR Portfolio's long position.The idea behind JPMorgan BetaBuilders Europe and SPDR Portfolio Europe pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| SPDR Portfolio vs. Franklin FTSE Europe | SPDR Portfolio vs. SPDR Portfolio MSCI | SPDR Portfolio vs. iShares Core MSCI | SPDR Portfolio vs. JPMorgan BetaBuilders Europe |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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