Correlation Between Financial Industries and Jpmorgan Small
Can any of the company-specific risk be diversified away by investing in both Financial Industries and Jpmorgan Small 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 Financial Industries and Jpmorgan Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Industries Fund and Jpmorgan Small Cap, you can compare the effects of market volatilities on Financial Industries and Jpmorgan Small 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 Financial Industries with a short position of Jpmorgan Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Industries and Jpmorgan Small.
Diversification Opportunities for Financial Industries and Jpmorgan Small
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Financial and Jpmorgan is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Financial Industries Fund and Jpmorgan Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Small Cap and Financial Industries 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 Financial Industries Fund are associated (or correlated) with Jpmorgan Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Small Cap has no effect on the direction of Financial Industries i.e., Financial Industries and Jpmorgan Small go up and down completely randomly.
Pair Corralation between Financial Industries and Jpmorgan Small
Assuming the 90 days horizon Financial Industries Fund is expected to generate 1.1 times more return on investment than Jpmorgan Small. However, Financial Industries is 1.1 times more volatile than Jpmorgan Small Cap. It trades about 0.23 of its potential returns per unit of risk. Jpmorgan Small Cap is currently generating about 0.21 per unit of risk. If you would invest 1,809 in Financial Industries Fund on October 24, 2024 and sell it today you would earn a total of 89.00 from holding Financial Industries Fund or generate 4.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.74% |
| Values | Daily Returns |
Financial Industries Fund vs. Jpmorgan Small Cap
Performance |
| Timeline |
| Financial Industries |
| Jpmorgan Small Cap |
Financial Industries and Jpmorgan Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Industries and Jpmorgan Small
The main advantage of trading using opposite Financial Industries and Jpmorgan Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Industries position performs unexpectedly, Jpmorgan Small 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 Small will offset losses from the drop in Jpmorgan Small's long position.| Financial Industries vs. Maryland Tax Free Bond | Financial Industries vs. Bts Tactical Fixed | Financial Industries vs. Artisan High Income | Financial Industries vs. Blrc Sgy Mnp |
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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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