Correlation Between JPMorgan Equity and First Trust
Can any of the company-specific risk be diversified away by investing in both JPMorgan Equity 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 Equity 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 Equity Premium and First Trust Exchange Traded, you can compare the effects of market volatilities on JPMorgan Equity 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 Equity with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Equity and First Trust.
Diversification Opportunities for JPMorgan Equity and First Trust
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between JPMorgan and First is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Equity Premium 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 Equity 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 Equity Premium 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 Equity i.e., JPMorgan Equity and First Trust go up and down completely randomly.
Pair Corralation between JPMorgan Equity and First Trust
Given the investment horizon of 90 days JPMorgan Equity is expected to generate 1.65 times less return on investment than First Trust. But when comparing it to its historical volatility, JPMorgan Equity Premium is 1.54 times less risky than First Trust. It trades about 0.46 of its potential returns per unit of risk. First Trust Exchange Traded is currently generating about 0.49 of returns per unit of risk over similar time horizon. If you would invest 1,941 in First Trust Exchange Traded on September 1, 2024 and sell it today you would earn a total of 146.00 from holding First Trust Exchange Traded or generate 7.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
JPMorgan Equity Premium vs. First Trust Exchange Traded
Performance |
| Timeline |
| JPMorgan Equity Premium |
| First Trust Exchange |
JPMorgan Equity and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Equity and First Trust
The main advantage of trading using opposite JPMorgan Equity and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Equity 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 Equity vs. JPMorgan Nasdaq Equity | JPMorgan Equity vs. Global X NASDAQ | JPMorgan Equity vs. Schwab Dividend Equity | JPMorgan Equity vs. Global X Russell |
| First Trust vs. Global X SP | First Trust vs. Amplify CWP Enhanced | First Trust vs. JPMorgan Equity Premium |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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