Correlation Between ETRACS Monthly and JPMorgan Nasdaq
Can any of the company-specific risk be diversified away by investing in both ETRACS Monthly and JPMorgan Nasdaq 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 ETRACS Monthly and JPMorgan Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETRACS Monthly Pay and JPMorgan Nasdaq Equity, you can compare the effects of market volatilities on ETRACS Monthly and JPMorgan Nasdaq 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 ETRACS Monthly with a short position of JPMorgan Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS Monthly and JPMorgan Nasdaq.
Diversification Opportunities for ETRACS Monthly and JPMorgan Nasdaq
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ETRACS and JPMorgan is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS Monthly Pay and JPMorgan Nasdaq Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Nasdaq Equity and ETRACS Monthly 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 ETRACS Monthly Pay are associated (or correlated) with JPMorgan Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Nasdaq Equity has no effect on the direction of ETRACS Monthly i.e., ETRACS Monthly and JPMorgan Nasdaq go up and down completely randomly.
Pair Corralation between ETRACS Monthly and JPMorgan Nasdaq
Given the investment horizon of 90 days ETRACS Monthly is expected to generate 4.44 times less return on investment than JPMorgan Nasdaq. In addition to that, ETRACS Monthly is 1.57 times more volatile than JPMorgan Nasdaq Equity. It trades about 0.03 of its total potential returns per unit of risk. JPMorgan Nasdaq Equity is currently generating about 0.19 per unit of volatility. If you would invest 5,367 in JPMorgan Nasdaq Equity on August 25, 2024 and sell it today you would earn a total of 290.00 from holding JPMorgan Nasdaq Equity or generate 5.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETRACS Monthly Pay vs. JPMorgan Nasdaq Equity
Performance |
| Timeline |
| ETRACS Monthly Pay |
| JPMorgan Nasdaq Equity |
ETRACS Monthly and JPMorgan Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETRACS Monthly and JPMorgan Nasdaq
The main advantage of trading using opposite ETRACS Monthly and JPMorgan Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS Monthly position performs unexpectedly, JPMorgan Nasdaq 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 Nasdaq will offset losses from the drop in JPMorgan Nasdaq's long position.| ETRACS Monthly vs. ProShares VIX Short Term | ETRACS Monthly vs. ProShares UltraShort Yen | ETRACS Monthly vs. iPath Series B |
| JPMorgan Nasdaq vs. JPMorgan Equity Premium | JPMorgan Nasdaq vs. Global X SP | JPMorgan Nasdaq vs. Amplify CWP Enhanced | JPMorgan Nasdaq 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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