Correlation Between First Trust and JP Morgan
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and JP Morgan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust SkyBridge and JP Morgan Exchange, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of JP Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and JP Morgan.
Diversification Opportunities for First Trust and JP Morgan
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and BBLB is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding First Trust SkyBridge and JP Morgan Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JP Morgan Exchange and First Trust 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 First Trust SkyBridge 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 First Trust i.e., First Trust and JP Morgan go up and down completely randomly.
Pair Corralation between First Trust and JP Morgan
Given the investment horizon of 90 days First Trust SkyBridge is expected to generate 5.69 times more return on investment than JP Morgan. However, First Trust is 5.69 times more volatile than JP Morgan Exchange. It trades about 0.11 of its potential returns per unit of risk. JP Morgan Exchange is currently generating about 0.05 per unit of risk. If you would invest 588.00 in First Trust SkyBridge on September 1, 2024 and sell it today you would earn a total of 1,482 from holding First Trust SkyBridge or generate 252.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
First Trust SkyBridge vs. JP Morgan Exchange
Performance |
| Timeline |
| First Trust SkyBridge |
| JP Morgan Exchange |
First Trust and JP Morgan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and JP Morgan
The main advantage of trading using opposite First Trust and JP Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. VanEck Digital Transformation | First Trust vs. Bitwise Crypto Industry | First Trust vs. Global X Blockchain | First Trust vs. First Trust Indxx |
| JP Morgan vs. SPDR Barclays Short | JP Morgan vs. SPDR Portfolio Intermediate | JP Morgan vs. SPDR Barclays Long | JP Morgan 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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