Correlation Between First Trust and JPMorgan Municipal
Can any of the company-specific risk be diversified away by investing in both First Trust and JPMorgan Municipal 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 Municipal 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 Municipal, you can compare the effects of market volatilities on First Trust and JPMorgan Municipal 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 Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and JPMorgan Municipal.
Diversification Opportunities for First Trust and JPMorgan Municipal
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between First and JPMorgan is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Managed and JPMorgan Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Municipal 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 Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Municipal has no effect on the direction of First Trust i.e., First Trust and JPMorgan Municipal go up and down completely randomly.
Pair Corralation between First Trust and JPMorgan Municipal
Considering the 90-day investment horizon First Trust is expected to generate 1.02 times less return on investment than JPMorgan Municipal. In addition to that, First Trust is 1.15 times more volatile than JPMorgan Municipal. It trades about 0.07 of its total potential returns per unit of risk. JPMorgan Municipal is currently generating about 0.08 per unit of volatility. If you would invest 4,692 in JPMorgan Municipal on August 30, 2024 and sell it today you would earn a total of 397.00 from holding JPMorgan Municipal or generate 8.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Managed vs. JPMorgan Municipal
Performance |
| Timeline |
| First Trust Managed |
| JPMorgan Municipal |
First Trust and JPMorgan Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and JPMorgan Municipal
The main advantage of trading using opposite First Trust and JPMorgan Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, JPMorgan Municipal 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 Municipal will offset losses from the drop in JPMorgan Municipal'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 Municipal vs. JPMorgan Ultra Short Municipal | JPMorgan Municipal vs. JPMorgan USD Emerging | JPMorgan Municipal vs. iShares Short Maturity | JPMorgan Municipal vs. IQ MacKay Municipal |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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