Correlation Between First Trust and JPMorgan Inflation
Can any of the company-specific risk be diversified away by investing in both First Trust and JPMorgan Inflation 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 Inflation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Exchange Traded and JPMorgan Inflation Managed, you can compare the effects of market volatilities on First Trust and JPMorgan Inflation 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 Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and JPMorgan Inflation.
Diversification Opportunities for First Trust and JPMorgan Inflation
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and JPMorgan is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and JPMorgan Inflation Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Inflation 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 Exchange Traded are associated (or correlated) with JPMorgan Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Inflation has no effect on the direction of First Trust i.e., First Trust and JPMorgan Inflation go up and down completely randomly.
Pair Corralation between First Trust and JPMorgan Inflation
Given the investment horizon of 90 days First Trust Exchange Traded is expected to generate 0.78 times more return on investment than JPMorgan Inflation. However, First Trust Exchange Traded is 1.28 times less risky than JPMorgan Inflation. It trades about -0.06 of its potential returns per unit of risk. JPMorgan Inflation Managed is currently generating about -0.14 per unit of risk. If you would invest 1,892 in First Trust Exchange Traded on August 25, 2024 and sell it today you would lose (4.00) from holding First Trust Exchange Traded or give up 0.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Exchange Traded vs. JPMorgan Inflation Managed
Performance |
| Timeline |
| First Trust Exchange |
| JPMorgan Inflation |
First Trust and JPMorgan Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and JPMorgan Inflation
The main advantage of trading using opposite First Trust and JPMorgan Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, JPMorgan Inflation 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 Inflation will offset losses from the drop in JPMorgan Inflation's long position.| First Trust vs. First Trust TCW | First Trust vs. First Trust TCW | First Trust vs. First Trust Enhanced | First Trust vs. First Trust Low |
| JPMorgan Inflation vs. PIMCO 1 5 Year | JPMorgan Inflation vs. PIMCO 15 Year | JPMorgan Inflation vs. SPDR Bloomberg 1 10 | JPMorgan Inflation vs. FlexShares iBoxx 5 Year |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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