Correlation Between Henderson European and Jpmorgan Intrepid
Can any of the company-specific risk be diversified away by investing in both Henderson European and Jpmorgan Intrepid 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 Henderson European and Jpmorgan Intrepid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Henderson European Focus and Jpmorgan Intrepid European, you can compare the effects of market volatilities on Henderson European and Jpmorgan Intrepid 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 Henderson European with a short position of Jpmorgan Intrepid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henderson European and Jpmorgan Intrepid.
Diversification Opportunities for Henderson European and Jpmorgan Intrepid
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Henderson and Jpmorgan is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Henderson European Focus and Jpmorgan Intrepid European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Intrepid and Henderson European 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 Henderson European Focus are associated (or correlated) with Jpmorgan Intrepid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Intrepid has no effect on the direction of Henderson European i.e., Henderson European and Jpmorgan Intrepid go up and down completely randomly.
Pair Corralation between Henderson European and Jpmorgan Intrepid
Assuming the 90 days horizon Henderson European is expected to generate 1.25 times less return on investment than Jpmorgan Intrepid. In addition to that, Henderson European is 1.11 times more volatile than Jpmorgan Intrepid European. It trades about 0.03 of its total potential returns per unit of risk. Jpmorgan Intrepid European is currently generating about 0.04 per unit of volatility. If you would invest 2,784 in Jpmorgan Intrepid European on August 26, 2024 and sell it today you would earn a total of 357.00 from holding Jpmorgan Intrepid European or generate 12.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Henderson European Focus vs. Jpmorgan Intrepid European
Performance |
| Timeline |
| Henderson European Focus |
| Jpmorgan Intrepid |
Henderson European and Jpmorgan Intrepid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Henderson European and Jpmorgan Intrepid
The main advantage of trading using opposite Henderson European and Jpmorgan Intrepid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Henderson European position performs unexpectedly, Jpmorgan Intrepid 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 Intrepid will offset losses from the drop in Jpmorgan Intrepid's long position.| Henderson European vs. Henderson European Focus | Henderson European vs. Invesco European Small | Henderson European vs. Henderson Global Equity | Henderson European vs. Oppenheimer Developing Markets |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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