Correlation Between Gmo High and Jpmorgan Hedged
Can any of the company-specific risk be diversified away by investing in both Gmo High and Jpmorgan Hedged 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 Gmo High and Jpmorgan Hedged into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo High Yield and Jpmorgan Hedged Equity, you can compare the effects of market volatilities on Gmo High and Jpmorgan Hedged 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 Gmo High with a short position of Jpmorgan Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo High and Jpmorgan Hedged.
Diversification Opportunities for Gmo High and Jpmorgan Hedged
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GMO and Jpmorgan is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Gmo High Yield and Jpmorgan Hedged Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Hedged Equity and Gmo High 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 Gmo High Yield are associated (or correlated) with Jpmorgan Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Hedged Equity has no effect on the direction of Gmo High i.e., Gmo High and Jpmorgan Hedged go up and down completely randomly.
Pair Corralation between Gmo High and Jpmorgan Hedged
Assuming the 90 days horizon Gmo High is expected to generate 1.58 times less return on investment than Jpmorgan Hedged. But when comparing it to its historical volatility, Gmo High Yield is 2.02 times less risky than Jpmorgan Hedged. It trades about 0.21 of its potential returns per unit of risk. Jpmorgan Hedged Equity is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,695 in Jpmorgan Hedged Equity on September 3, 2024 and sell it today you would earn a total of 184.00 from holding Jpmorgan Hedged Equity or generate 10.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo High Yield vs. Jpmorgan Hedged Equity
Performance |
| Timeline |
| Gmo High Yield |
| Jpmorgan Hedged Equity |
Gmo High and Jpmorgan Hedged Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo High and Jpmorgan Hedged
The main advantage of trading using opposite Gmo High and Jpmorgan Hedged positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo High position performs unexpectedly, Jpmorgan Hedged 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 Hedged will offset losses from the drop in Jpmorgan Hedged's long position.| Gmo High vs. Vanguard High Yield Corporate | Gmo High vs. Vanguard High Yield Porate | Gmo High vs. Blackrock Hi Yld | Gmo High vs. Blackrock High Yield |
| Jpmorgan Hedged vs. Financials Ultrasector Profund | Jpmorgan Hedged vs. Vanguard Financials Index | Jpmorgan Hedged vs. Goldman Sachs Financial | Jpmorgan Hedged vs. Mesirow Financial Small |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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