Correlation Between American Funds and Jpmorgan Investor
Can any of the company-specific risk be diversified away by investing in both American Funds and Jpmorgan Investor 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 American Funds and Jpmorgan Investor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Conservative and Jpmorgan Investor Growth, you can compare the effects of market volatilities on American Funds and Jpmorgan Investor 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 American Funds with a short position of Jpmorgan Investor. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Jpmorgan Investor.
Diversification Opportunities for American Funds and Jpmorgan Investor
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Jpmorgan is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Conservative and Jpmorgan Investor Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Investor Growth and American Funds 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 American Funds Conservative are associated (or correlated) with Jpmorgan Investor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Investor Growth has no effect on the direction of American Funds i.e., American Funds and Jpmorgan Investor go up and down completely randomly.
Pair Corralation between American Funds and Jpmorgan Investor
Assuming the 90 days horizon American Funds is expected to generate 1.18 times less return on investment than Jpmorgan Investor. But when comparing it to its historical volatility, American Funds Conservative is 1.43 times less risky than Jpmorgan Investor. It trades about 0.12 of its potential returns per unit of risk. Jpmorgan Investor Growth is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,680 in Jpmorgan Investor Growth on September 12, 2024 and sell it today you would earn a total of 331.00 from holding Jpmorgan Investor Growth or generate 19.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Conservative vs. Jpmorgan Investor Growth
Performance |
| Timeline |
| American Funds Conse |
| Jpmorgan Investor Growth |
American Funds and Jpmorgan Investor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Jpmorgan Investor
The main advantage of trading using opposite American Funds and Jpmorgan Investor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Jpmorgan Investor 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 Investor will offset losses from the drop in Jpmorgan Investor's long position.| American Funds vs. Sp Smallcap 600 | American Funds vs. Ab Small Cap | American Funds vs. Vy Columbia Small | American Funds vs. Guidemark Smallmid Cap |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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