Correlation Between JPMorgan Core and First Trust
Can any of the company-specific risk be diversified away by investing in both JPMorgan Core 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 Core 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 Core Plus and First Trust TCW, you can compare the effects of market volatilities on JPMorgan Core 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 Core with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Core and First Trust.
Diversification Opportunities for JPMorgan Core and First Trust
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between JPMorgan and First is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Core Plus and First Trust TCW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust TCW and JPMorgan Core 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 Core Plus 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 TCW has no effect on the direction of JPMorgan Core i.e., JPMorgan Core and First Trust go up and down completely randomly.
Pair Corralation between JPMorgan Core and First Trust
Given the investment horizon of 90 days JPMorgan Core Plus is expected to generate 0.83 times more return on investment than First Trust. However, JPMorgan Core Plus is 1.21 times less risky than First Trust. It trades about -0.03 of its potential returns per unit of risk. First Trust TCW is currently generating about -0.13 per unit of risk. If you would invest 4,666 in JPMorgan Core Plus on August 27, 2024 and sell it today you would lose (10.00) from holding JPMorgan Core Plus or give up 0.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan Core Plus vs. First Trust TCW
Performance |
| Timeline |
| JPMorgan Core Plus |
| First Trust TCW |
JPMorgan Core and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Core and First Trust
The main advantage of trading using opposite JPMorgan Core and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Core 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 Core vs. First Trust Low | JPMorgan Core vs. First Trust Enhanced | JPMorgan Core vs. First Trust Tactical | JPMorgan Core vs. First Trust Managed |
| First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced | First Trust vs. First Trust Tactical | First Trust vs. First Trust Managed |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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