Correlation Between Main Buywrite and JPMorgan Equity
Can any of the company-specific risk be diversified away by investing in both Main Buywrite 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 Main Buywrite and JPMorgan Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Main Buywrite ETF and JPMorgan Equity Premium, you can compare the effects of market volatilities on Main Buywrite 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 Main Buywrite with a short position of JPMorgan Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Buywrite and JPMorgan Equity.
Diversification Opportunities for Main Buywrite and JPMorgan Equity
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Main and JPMorgan is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Main Buywrite ETF 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 Main Buywrite 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 Main Buywrite ETF 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 Main Buywrite i.e., Main Buywrite and JPMorgan Equity go up and down completely randomly.
Pair Corralation between Main Buywrite and JPMorgan Equity
Given the investment horizon of 90 days Main Buywrite is expected to generate 1.7 times less return on investment than JPMorgan Equity. But when comparing it to its historical volatility, Main Buywrite ETF is 1.62 times less risky than JPMorgan Equity. It trades about 0.12 of its potential returns per unit of risk. JPMorgan Equity Premium is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 5,396 in JPMorgan Equity Premium on August 27, 2024 and sell it today you would earn a total of 620.00 from holding JPMorgan Equity Premium or generate 11.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Main Buywrite ETF vs. JPMorgan Equity Premium
Performance |
| Timeline |
| Main Buywrite ETF |
| JPMorgan Equity Premium |
Main Buywrite and JPMorgan Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Buywrite and JPMorgan Equity
The main advantage of trading using opposite Main Buywrite and JPMorgan Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Buywrite 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.The idea behind Main Buywrite ETF and JPMorgan Equity Premium 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.| JPMorgan Equity vs. JPMorgan Nasdaq Equity | JPMorgan Equity vs. Global X NASDAQ | JPMorgan Equity vs. Schwab Dividend Equity | JPMorgan Equity vs. Global X Russell |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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