Correlation Between First Trust and JPMorgan Chase
Can any of the company-specific risk be diversified away by investing in both First Trust and JPMorgan Chase 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 JPMorgan Chase into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust North and JPMorgan Chase Financial, you can compare the effects of market volatilities on First Trust and JPMorgan Chase 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 JPMorgan Chase. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and JPMorgan Chase.
Diversification Opportunities for First Trust and JPMorgan Chase
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and JPMorgan is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding First Trust North and JPMorgan Chase Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Chase Financial 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 North are associated (or correlated) with JPMorgan Chase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Chase Financial has no effect on the direction of First Trust i.e., First Trust and JPMorgan Chase go up and down completely randomly.
Pair Corralation between First Trust and JPMorgan Chase
Given the investment horizon of 90 days First Trust North is expected to generate 1.12 times more return on investment than JPMorgan Chase. However, First Trust is 1.12 times more volatile than JPMorgan Chase Financial. It trades about 0.48 of its potential returns per unit of risk. JPMorgan Chase Financial is currently generating about 0.5 per unit of risk. If you would invest 3,415 in First Trust North on August 29, 2024 and sell it today you would earn a total of 344.00 from holding First Trust North or generate 10.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust North vs. JPMorgan Chase Financial
Performance |
| Timeline |
| First Trust North |
| JPMorgan Chase Financial |
First Trust and JPMorgan Chase Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and JPMorgan Chase
The main advantage of trading using opposite First Trust and JPMorgan Chase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, JPMorgan Chase 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 Chase will offset losses from the drop in JPMorgan Chase's long position.| First Trust vs. Global X MLP | First Trust vs. Tortoise North American | First Trust vs. InfraCap MLP ETF | First Trust vs. UBS AG London |
| JPMorgan Chase vs. First Trust Exchange Traded | JPMorgan Chase vs. Ultimus Managers Trust | JPMorgan Chase vs. Horizon Kinetics Medical | JPMorgan Chase vs. Harbor Health Care |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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