Correlation Between JPMorgan Inflation and First Trust
Can any of the company-specific risk be diversified away by investing in both JPMorgan Inflation 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 Inflation 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 Inflation Managed and First Trust Exchange Traded, you can compare the effects of market volatilities on JPMorgan Inflation 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 Inflation with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Inflation and First Trust.
Diversification Opportunities for JPMorgan Inflation and First Trust
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between JPMorgan and First is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Inflation Managed and First Trust Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Exchange and JPMorgan Inflation 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 Inflation Managed 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 Exchange has no effect on the direction of JPMorgan Inflation i.e., JPMorgan Inflation and First Trust go up and down completely randomly.
Pair Corralation between JPMorgan Inflation and First Trust
Given the investment horizon of 90 days JPMorgan Inflation Managed is expected to generate 1.29 times more return on investment than First Trust. However, JPMorgan Inflation is 1.29 times more volatile than First Trust Exchange Traded. It trades about 0.14 of its potential returns per unit of risk. First Trust Exchange Traded is currently generating about 0.17 per unit of risk. If you would invest 4,302 in JPMorgan Inflation Managed on August 25, 2024 and sell it today you would earn a total of 399.00 from holding JPMorgan Inflation Managed or generate 9.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan Inflation Managed vs. First Trust Exchange Traded
Performance |
| Timeline |
| JPMorgan Inflation |
| First Trust Exchange |
JPMorgan Inflation and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Inflation and First Trust
The main advantage of trading using opposite JPMorgan Inflation and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Inflation 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 Inflation vs. PIMCO 1 5 Year | JPMorgan Inflation vs. PIMCO 15 Year | JPMorgan Inflation vs. SPDR Bloomberg 1 10 | JPMorgan Inflation vs. FlexShares iBoxx 5 Year |
| First Trust vs. First Trust TCW | First Trust vs. First Trust TCW | First Trust vs. First Trust Enhanced | First Trust vs. First Trust Low |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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