Correlation Between First Trust and JPMorgan BetaBuilders
Can any of the company-specific risk be diversified away by investing in both First Trust and JPMorgan BetaBuilders 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 BetaBuilders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Senior and JPMorgan BetaBuilders USD, you can compare the effects of market volatilities on First Trust and JPMorgan BetaBuilders 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 BetaBuilders. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and JPMorgan BetaBuilders.
Diversification Opportunities for First Trust and JPMorgan BetaBuilders
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and JPMorgan is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Senior and JPMorgan BetaBuilders USD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan BetaBuilders USD 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 Senior are associated (or correlated) with JPMorgan BetaBuilders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan BetaBuilders USD has no effect on the direction of First Trust i.e., First Trust and JPMorgan BetaBuilders go up and down completely randomly.
Pair Corralation between First Trust and JPMorgan BetaBuilders
Given the investment horizon of 90 days First Trust is expected to generate 1.5 times less return on investment than JPMorgan BetaBuilders. But when comparing it to its historical volatility, First Trust Senior is 1.36 times less risky than JPMorgan BetaBuilders. It trades about 0.17 of its potential returns per unit of risk. JPMorgan BetaBuilders USD is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 4,653 in JPMorgan BetaBuilders USD on August 30, 2024 and sell it today you would earn a total of 44.00 from holding JPMorgan BetaBuilders USD or generate 0.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Senior vs. JPMorgan BetaBuilders USD
Performance |
| Timeline |
| First Trust Senior |
| JPMorgan BetaBuilders USD |
First Trust and JPMorgan BetaBuilders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and JPMorgan BetaBuilders
The main advantage of trading using opposite First Trust and JPMorgan BetaBuilders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, JPMorgan BetaBuilders 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 BetaBuilders will offset losses from the drop in JPMorgan BetaBuilders' long position.| First Trust vs. First Trust Tactical | First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced | First Trust vs. First Trust Managed |
| JPMorgan BetaBuilders vs. SPDR Portfolio High | JPMorgan BetaBuilders vs. BNY Mellon High | JPMorgan BetaBuilders vs. JP Morgan Exchange Traded | JPMorgan BetaBuilders vs. JPMorgan USD Emerging |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Stocks Directory Find actively traded stocks across global markets |