Correlation Between First Trust and JPMorgan Core
Can any of the company-specific risk be diversified away by investing in both First Trust and JPMorgan Core 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 Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Managed and JPMorgan Core Plus, you can compare the effects of market volatilities on First Trust and JPMorgan Core 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 Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and JPMorgan Core.
Diversification Opportunities for First Trust and JPMorgan Core
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and JPMorgan is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Managed and JPMorgan Core Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Core Plus 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 Managed are associated (or correlated) with JPMorgan Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Core Plus has no effect on the direction of First Trust i.e., First Trust and JPMorgan Core go up and down completely randomly.
Pair Corralation between First Trust and JPMorgan Core
Considering the 90-day investment horizon First Trust Managed is expected to generate 1.24 times more return on investment than JPMorgan Core. However, First Trust is 1.24 times more volatile than JPMorgan Core Plus. It trades about 0.04 of its potential returns per unit of risk. JPMorgan Core Plus is currently generating about -0.03 per unit of risk. If you would invest 5,118 in First Trust Managed on August 27, 2024 and sell it today you would earn a total of 17.00 from holding First Trust Managed or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Managed vs. JPMorgan Core Plus
Performance |
| Timeline |
| First Trust Managed |
| JPMorgan Core Plus |
First Trust and JPMorgan Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and JPMorgan Core
The main advantage of trading using opposite First Trust and JPMorgan Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, JPMorgan Core 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 Core will offset losses from the drop in JPMorgan Core's long position.| First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced | First Trust vs. First Trust Senior | First Trust vs. First Trust TCW |
| JPMorgan Core vs. First Trust Low | JPMorgan Core vs. First Trust Enhanced | JPMorgan Core vs. First Trust Tactical | JPMorgan Core vs. First Trust Managed |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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