Correlation Between JP Morgan and Northern Lights
Can any of the company-specific risk be diversified away by investing in both JP Morgan and Northern Lights 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 JP Morgan and Northern Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JP Morgan Exchange Traded and Northern Lights, you can compare the effects of market volatilities on JP Morgan and Northern Lights 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 JP Morgan with a short position of Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of JP Morgan and Northern Lights.
Diversification Opportunities for JP Morgan and Northern Lights
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JDIV and Northern is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding JP Morgan Exchange Traded and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights and JP Morgan 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 JP Morgan Exchange Traded are associated (or correlated) with Northern Lights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Lights has no effect on the direction of JP Morgan i.e., JP Morgan and Northern Lights go up and down completely randomly.
Pair Corralation between JP Morgan and Northern Lights
Given the investment horizon of 90 days JP Morgan Exchange Traded is expected to under-perform the Northern Lights. But the etf apears to be less risky and, when comparing its historical volatility, JP Morgan Exchange Traded is 1.17 times less risky than Northern Lights. The etf trades about -0.05 of its potential returns per unit of risk. The Northern Lights is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,723 in Northern Lights on August 30, 2024 and sell it today you would earn a total of 55.00 from holding Northern Lights or generate 2.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JP Morgan Exchange Traded vs. Northern Lights
Performance |
| Timeline |
| JP Morgan Exchange |
| Northern Lights |
JP Morgan and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JP Morgan and Northern Lights
The main advantage of trading using opposite JP Morgan and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JP Morgan position performs unexpectedly, Northern Lights 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 Northern Lights will offset losses from the drop in Northern Lights' long position.| JP Morgan vs. FT Vest Equity | JP Morgan vs. Zillow Group Class | JP Morgan vs. Northern Lights | JP Morgan vs. VanEck Vectors Moodys |
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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