Correlation Between JPMorgan BetaBuilders and Xtrackers Russell
Can any of the company-specific risk be diversified away by investing in both JPMorgan BetaBuilders and Xtrackers Russell 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 Xtrackers Russell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JPMorgan BetaBuilders Mid and Xtrackers Russell Multifactor, you can compare the effects of market volatilities on JPMorgan BetaBuilders and Xtrackers Russell 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 Xtrackers Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan BetaBuilders and Xtrackers Russell.
Diversification Opportunities for JPMorgan BetaBuilders and Xtrackers Russell
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between JPMorgan and Xtrackers is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan BetaBuilders Mid and Xtrackers Russell Multifactor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Russell 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 Mid are associated (or correlated) with Xtrackers Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Russell has no effect on the direction of JPMorgan BetaBuilders i.e., JPMorgan BetaBuilders and Xtrackers Russell go up and down completely randomly.
Pair Corralation between JPMorgan BetaBuilders and Xtrackers Russell
Given the investment horizon of 90 days JPMorgan BetaBuilders Mid is expected to generate 1.36 times more return on investment than Xtrackers Russell. However, JPMorgan BetaBuilders is 1.36 times more volatile than Xtrackers Russell Multifactor. It trades about 0.42 of its potential returns per unit of risk. Xtrackers Russell Multifactor is currently generating about 0.38 per unit of risk. If you would invest 9,442 in JPMorgan BetaBuilders Mid on September 1, 2024 and sell it today you would earn a total of 1,007 from holding JPMorgan BetaBuilders Mid or generate 10.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
JPMorgan BetaBuilders Mid vs. Xtrackers Russell Multifactor
Performance |
| Timeline |
| JPMorgan BetaBuilders Mid |
| Xtrackers Russell |
JPMorgan BetaBuilders and Xtrackers Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan BetaBuilders and Xtrackers Russell
The main advantage of trading using opposite JPMorgan BetaBuilders and Xtrackers Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan BetaBuilders position performs unexpectedly, Xtrackers Russell 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 Xtrackers Russell will offset losses from the drop in Xtrackers Russell's long position.The idea behind JPMorgan BetaBuilders Mid and Xtrackers Russell Multifactor 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.
| Xtrackers Russell vs. Xtrackers FTSE Developed | Xtrackers Russell vs. John Hancock Multifactor | Xtrackers Russell vs. Xtrackers MSCI All | Xtrackers Russell vs. Xtrackers MSCI Eurozone |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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