Correlation Between BetaPro SP and JPMorgan Equity
Can any of the company-specific risk be diversified away by investing in both BetaPro SP and JPMorgan Equity 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 BetaPro SP and JPMorgan Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaPro SP TSX and JPMorgan Equity Premium, you can compare the effects of market volatilities on BetaPro SP and JPMorgan Equity 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 BetaPro SP with a short position of JPMorgan Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SP and JPMorgan Equity.
Diversification Opportunities for BetaPro SP and JPMorgan Equity
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BetaPro and JPMorgan is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SP TSX and JPMorgan Equity Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Equity Premium and BetaPro SP 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 BetaPro SP TSX are associated (or correlated) with JPMorgan Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Equity Premium has no effect on the direction of BetaPro SP i.e., BetaPro SP and JPMorgan Equity go up and down completely randomly.
Pair Corralation between BetaPro SP and JPMorgan Equity
Assuming the 90 days trading horizon BetaPro SP is expected to generate 2.09 times less return on investment than JPMorgan Equity. In addition to that, BetaPro SP is 5.87 times more volatile than JPMorgan Equity Premium. It trades about 0.03 of its total potential returns per unit of risk. JPMorgan Equity Premium is currently generating about 0.37 per unit of volatility. If you would invest 2,494 in JPMorgan Equity Premium on August 31, 2024 and sell it today you would earn a total of 205.00 from holding JPMorgan Equity Premium or generate 8.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 67.74% |
| Values | Daily Returns |
BetaPro SP TSX vs. JPMorgan Equity Premium
Performance |
| Timeline |
| BetaPro SP TSX |
| JPMorgan Equity Premium |
BetaPro SP and JPMorgan Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro SP and JPMorgan Equity
The main advantage of trading using opposite BetaPro SP and JPMorgan Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro SP position performs unexpectedly, JPMorgan Equity 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 Equity will offset losses from the drop in JPMorgan Equity's long position.| BetaPro SP vs. BetaPro SPTSX Capped | BetaPro SP vs. BetaPro SPTSX Capped | BetaPro SP vs. BetaPro SP TSX | BetaPro SP vs. BetaPro SP TSX |
| JPMorgan Equity vs. JPMorgan Nasdaq Equity | JPMorgan Equity vs. NBI High Yield | JPMorgan Equity vs. NBI Unconstrained Fixed | JPMorgan Equity vs. Mackenzie Developed ex North |
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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