Correlation Between BetaShares Global and JPMorgan Global
Can any of the company-specific risk be diversified away by investing in both BetaShares Global and JPMorgan Global 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 BetaShares Global and JPMorgan Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaShares Global Government and JPMorgan Global Equity, you can compare the effects of market volatilities on BetaShares Global and JPMorgan Global 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 BetaShares Global with a short position of JPMorgan Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Global and JPMorgan Global.
Diversification Opportunities for BetaShares Global and JPMorgan Global
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BetaShares and JPMorgan is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Global Government and JPMorgan Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Global Equity and BetaShares Global 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 BetaShares Global Government are associated (or correlated) with JPMorgan Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Global Equity has no effect on the direction of BetaShares Global i.e., BetaShares Global and JPMorgan Global go up and down completely randomly.
Pair Corralation between BetaShares Global and JPMorgan Global
Assuming the 90 days trading horizon BetaShares Global Government is expected to generate 1.16 times more return on investment than JPMorgan Global. However, BetaShares Global is 1.16 times more volatile than JPMorgan Global Equity. It trades about 0.17 of its potential returns per unit of risk. JPMorgan Global Equity is currently generating about 0.07 per unit of risk. If you would invest 1,316 in BetaShares Global Government on November 28, 2024 and sell it today you would earn a total of 33.00 from holding BetaShares Global Government or generate 2.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaShares Global Government vs. JPMorgan Global Equity
Performance |
| Timeline |
| BetaShares Global |
| JPMorgan Global Equity |
BetaShares Global and JPMorgan Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaShares Global and JPMorgan Global
The main advantage of trading using opposite BetaShares Global and JPMorgan Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaShares Global position performs unexpectedly, JPMorgan Global 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 Global will offset losses from the drop in JPMorgan Global's long position.The idea behind BetaShares Global Government and JPMorgan Global Equity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 CEOs Directory module to screen CEOs from public companies around the world.
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