Correlation Between JPMorgan Global and Mercantile Investment
Can any of the company-specific risk be diversified away by investing in both JPMorgan Global and Mercantile Investment 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 Global and Mercantile Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JPMorgan Global Emerging and The Mercantile Investment, you can compare the effects of market volatilities on JPMorgan Global and Mercantile Investment 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 Global with a short position of Mercantile Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Global and Mercantile Investment.
Diversification Opportunities for JPMorgan Global and Mercantile Investment
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between JPMorgan and Mercantile is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Global Emerging and The Mercantile Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Mercantile Investment and JPMorgan Global 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 Global Emerging are associated (or correlated) with Mercantile Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Mercantile Investment has no effect on the direction of JPMorgan Global i.e., JPMorgan Global and Mercantile Investment go up and down completely randomly.
Pair Corralation between JPMorgan Global and Mercantile Investment
Assuming the 90 days trading horizon JPMorgan Global is expected to generate 3.24 times less return on investment than Mercantile Investment. But when comparing it to its historical volatility, JPMorgan Global Emerging is 1.17 times less risky than Mercantile Investment. It trades about 0.02 of its potential returns per unit of risk. The Mercantile Investment is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 19,367 in The Mercantile Investment on September 14, 2024 and sell it today you would earn a total of 4,883 from holding The Mercantile Investment or generate 25.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan Global Emerging vs. The Mercantile Investment
Performance |
| Timeline |
| JPMorgan Global Emerging |
| The Mercantile Investment |
JPMorgan Global and Mercantile Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Global and Mercantile Investment
The main advantage of trading using opposite JPMorgan Global and Mercantile Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Global position performs unexpectedly, Mercantile Investment 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 Mercantile Investment will offset losses from the drop in Mercantile Investment's long position.| JPMorgan Global vs. The Mercantile Investment | JPMorgan Global vs. Aberdeen Diversified Income | JPMorgan Global vs. Monks Investment Trust | JPMorgan Global vs. GoldMining |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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