Correlation Between JP Morgan and SPDR Barclays
Can any of the company-specific risk be diversified away by investing in both JP Morgan and SPDR Barclays 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 SPDR Barclays 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 SPDR Barclays Long, you can compare the effects of market volatilities on JP Morgan and SPDR Barclays 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 SPDR Barclays. Check out your portfolio center. Please also check ongoing floating volatility patterns of JP Morgan and SPDR Barclays.
Diversification Opportunities for JP Morgan and SPDR Barclays
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BBSB and SPDR is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding JP Morgan Exchange Traded and SPDR Barclays Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Barclays Long 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 SPDR Barclays. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Barclays Long has no effect on the direction of JP Morgan i.e., JP Morgan and SPDR Barclays go up and down completely randomly.
Pair Corralation between JP Morgan and SPDR Barclays
Given the investment horizon of 90 days JP Morgan is expected to generate 1.09 times less return on investment than SPDR Barclays. But when comparing it to its historical volatility, JP Morgan Exchange Traded is 7.6 times less risky than SPDR Barclays. It trades about 0.2 of its potential returns per unit of risk. SPDR Barclays Long is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,716 in SPDR Barclays Long on September 3, 2024 and sell it today you would earn a total of 71.00 from holding SPDR Barclays Long or generate 2.61% 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. SPDR Barclays Long
Performance |
| Timeline |
| JP Morgan Exchange |
| SPDR Barclays Long |
JP Morgan and SPDR Barclays Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JP Morgan and SPDR Barclays
The main advantage of trading using opposite JP Morgan and SPDR Barclays positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JP Morgan position performs unexpectedly, SPDR Barclays 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 Barclays will offset losses from the drop in SPDR Barclays' long position.| JP Morgan vs. iShares 7 10 Year | JP Morgan vs. iShares iBoxx Investment | JP Morgan vs. iShares TIPS Bond | JP Morgan vs. iShares 3 7 Year |
| SPDR Barclays vs. SPDR Barclays Short | SPDR Barclays vs. SPDR Portfolio Intermediate | SPDR Barclays vs. SPDR Barclays Long | SPDR Barclays vs. SPDR Barclays Intermediate |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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