Correlation Between JPMorgan Active and First Trust
Can any of the company-specific risk be diversified away by investing in both JPMorgan Active and First Trust 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 Active and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JPMorgan Active Value and First Trust High, you can compare the effects of market volatilities on JPMorgan Active and First Trust 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 Active with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Active and First Trust.
Diversification Opportunities for JPMorgan Active and First Trust
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between JPMorgan and First is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Active Value and First Trust High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust High and JPMorgan Active 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 Active Value are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust High has no effect on the direction of JPMorgan Active i.e., JPMorgan Active and First Trust go up and down completely randomly.
Pair Corralation between JPMorgan Active and First Trust
Given the investment horizon of 90 days JPMorgan Active Value is expected to generate 2.49 times more return on investment than First Trust. However, JPMorgan Active is 2.49 times more volatile than First Trust High. It trades about 0.08 of its potential returns per unit of risk. First Trust High is currently generating about 0.05 per unit of risk. If you would invest 5,102 in JPMorgan Active Value on August 26, 2024 and sell it today you would earn a total of 1,688 from holding JPMorgan Active Value or generate 33.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan Active Value vs. First Trust High
Performance |
| Timeline |
| JPMorgan Active Value |
| First Trust High |
JPMorgan Active and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Active and First Trust
The main advantage of trading using opposite JPMorgan Active and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Active position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| JPMorgan Active vs. Global X Funds | JPMorgan Active vs. Dell Technologies | JPMorgan Active vs. Juniper Networks |
| First Trust vs. Capital Group Short | First Trust vs. Capital Group Municipal | First Trust vs. Capital Group Global | First Trust vs. Capital Group Dividend |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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