Correlation Between First Trust and JPMorgan Ultra
Can any of the company-specific risk be diversified away by investing in both First Trust and JPMorgan Ultra 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 Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Ultra and JPMorgan Ultra Short Municipal, you can compare the effects of market volatilities on First Trust and JPMorgan Ultra 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 Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and JPMorgan Ultra.
Diversification Opportunities for First Trust and JPMorgan Ultra
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and JPMorgan is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Ultra and JPMorgan Ultra Short Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Ultra Short 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 Ultra are associated (or correlated) with JPMorgan Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Ultra Short has no effect on the direction of First Trust i.e., First Trust and JPMorgan Ultra go up and down completely randomly.
Pair Corralation between First Trust and JPMorgan Ultra
Given the investment horizon of 90 days First Trust is expected to generate 1.37 times less return on investment than JPMorgan Ultra. In addition to that, First Trust is 1.75 times more volatile than JPMorgan Ultra Short Municipal. It trades about 0.16 of its total potential returns per unit of risk. JPMorgan Ultra Short Municipal is currently generating about 0.37 per unit of volatility. If you would invest 4,989 in JPMorgan Ultra Short Municipal on September 1, 2024 and sell it today you would earn a total of 101.00 from holding JPMorgan Ultra Short Municipal or generate 2.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Ultra vs. JPMorgan Ultra Short Municipal
Performance |
| Timeline |
| First Trust Ultra |
| JPMorgan Ultra Short |
First Trust and JPMorgan Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and JPMorgan Ultra
The main advantage of trading using opposite First Trust and JPMorgan Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, JPMorgan Ultra 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 Ultra will offset losses from the drop in JPMorgan Ultra's long position.| First Trust vs. First Trust Short | First Trust vs. First Trust Municipal | First Trust vs. First Trust Institutional | First Trust vs. JPMorgan Ultra Short Municipal |
| JPMorgan Ultra vs. JPMorgan Municipal | JPMorgan Ultra vs. iShares Short Maturity | JPMorgan Ultra vs. JPMorgan Ultra Short Income | JPMorgan Ultra vs. iShares Ultra Short Term |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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