Correlation Between JP Morgan and First Advantage
Can any of the company-specific risk be diversified away by investing in both JP Morgan and First Advantage 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 JP Morgan and First Advantage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JP Morgan Exchange Traded and First Advantage Corp, you can compare the effects of market volatilities on JP Morgan and First Advantage 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 JP Morgan with a short position of First Advantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of JP Morgan and First Advantage.
Diversification Opportunities for JP Morgan and First Advantage
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BBIB and First is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding JP Morgan Exchange Traded and First Advantage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Advantage Corp and JP Morgan 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 JP Morgan Exchange Traded are associated (or correlated) with First Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Advantage Corp has no effect on the direction of JP Morgan i.e., JP Morgan and First Advantage go up and down completely randomly.
Pair Corralation between JP Morgan and First Advantage
Given the investment horizon of 90 days JP Morgan is expected to generate 6.45 times less return on investment than First Advantage. But when comparing it to its historical volatility, JP Morgan Exchange Traded is 5.09 times less risky than First Advantage. It trades about 0.05 of its potential returns per unit of risk. First Advantage Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,542 in First Advantage Corp on August 25, 2024 and sell it today you would earn a total of 368.00 from holding First Advantage Corp or generate 23.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JP Morgan Exchange Traded vs. First Advantage Corp
Performance |
| Timeline |
| JP Morgan Exchange |
| First Advantage Corp |
JP Morgan and First Advantage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JP Morgan and First Advantage
The main advantage of trading using opposite JP Morgan and First Advantage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JP Morgan position performs unexpectedly, First Advantage 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 First Advantage will offset losses from the drop in First Advantage's long position.| JP Morgan vs. First Advantage Corp | JP Morgan vs. ATS Corporation | JP Morgan vs. Putnam ETF Trust | JP Morgan vs. US Treasury 30 |
| First Advantage vs. ExlService Holdings | First Advantage vs. WNS Holdings | First Advantage vs. Gartner | First Advantage vs. The Hackett Group |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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