Correlation Between Xtrackers California and JP Morgan
Can any of the company-specific risk be diversified away by investing in both Xtrackers California and JP Morgan 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 Xtrackers California and JP Morgan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers California Municipal and JP Morgan Exchange Traded, you can compare the effects of market volatilities on Xtrackers California and JP Morgan 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 Xtrackers California with a short position of JP Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers California and JP Morgan.
Diversification Opportunities for Xtrackers California and JP Morgan
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Xtrackers and JPIE is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers California Municipal and JP Morgan Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JP Morgan Exchange and Xtrackers California 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 Xtrackers California Municipal are associated (or correlated) with JP Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JP Morgan Exchange has no effect on the direction of Xtrackers California i.e., Xtrackers California and JP Morgan go up and down completely randomly.
Pair Corralation between Xtrackers California and JP Morgan
Allowing for the 90-day total investment horizon Xtrackers California Municipal is expected to generate 3.16 times more return on investment than JP Morgan. However, Xtrackers California is 3.16 times more volatile than JP Morgan Exchange Traded. It trades about 0.15 of its potential returns per unit of risk. JP Morgan Exchange Traded is currently generating about 0.07 per unit of risk. If you would invest 2,501 in Xtrackers California Municipal on August 27, 2024 and sell it today you would earn a total of 22.00 from holding Xtrackers California Municipal or generate 0.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers California Municipal vs. JP Morgan Exchange Traded
Performance |
| Timeline |
| Xtrackers California |
| JP Morgan Exchange |
Xtrackers California and JP Morgan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers California and JP Morgan
The main advantage of trading using opposite Xtrackers California and JP Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers California position performs unexpectedly, JP Morgan 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 JP Morgan will offset losses from the drop in JP Morgan's long position.| Xtrackers California vs. SSGA Active Trust | Xtrackers California vs. SPDR Nuveen Municipal | Xtrackers California vs. iShares Short Maturity | Xtrackers California vs. First Trust Flexible |
| JP Morgan vs. JPMorgan Core Plus | JP Morgan vs. JPMorgan International Bond | JP Morgan vs. JPMorgan Ultra Short Income | JP Morgan vs. JPMorgan Short Duration |
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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