Correlation Between Jpmorgan Smartretirement and Western Asset
Can any of the company-specific risk be diversified away by investing in both Jpmorgan Smartretirement and Western Asset 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 Jpmorgan Smartretirement and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jpmorgan Smartretirement Blend and Western Asset Diversified, you can compare the effects of market volatilities on Jpmorgan Smartretirement and Western Asset 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 Jpmorgan Smartretirement with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan Smartretirement and Western Asset.
Diversification Opportunities for Jpmorgan Smartretirement and Western Asset
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jpmorgan and Western is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Smartretirement Blend and Western Asset Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Diversified and Jpmorgan Smartretirement 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 Jpmorgan Smartretirement Blend are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Diversified has no effect on the direction of Jpmorgan Smartretirement i.e., Jpmorgan Smartretirement and Western Asset go up and down completely randomly.
Pair Corralation between Jpmorgan Smartretirement and Western Asset
Assuming the 90 days horizon Jpmorgan Smartretirement Blend is expected to generate 3.94 times more return on investment than Western Asset. However, Jpmorgan Smartretirement is 3.94 times more volatile than Western Asset Diversified. It trades about -0.04 of its potential returns per unit of risk. Western Asset Diversified is currently generating about -0.18 per unit of risk. If you would invest 2,573 in Jpmorgan Smartretirement Blend on January 16, 2025 and sell it today you would lose (128.00) from holding Jpmorgan Smartretirement Blend or give up 4.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jpmorgan Smartretirement Blend vs. Western Asset Diversified
Performance |
| Timeline |
| Jpmorgan Smartretirement |
| Western Asset Diversified |
Jpmorgan Smartretirement and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jpmorgan Smartretirement and Western Asset
The main advantage of trading using opposite Jpmorgan Smartretirement and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jpmorgan Smartretirement position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.The idea behind Jpmorgan Smartretirement Blend and Western Asset Diversified 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.
| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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