Correlation Between JPMorgan Equity and Invesco SP
Can any of the company-specific risk be diversified away by investing in both JPMorgan Equity and Invesco SP 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 Invesco SP 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 Invesco SP 500, you can compare the effects of market volatilities on JPMorgan Equity and Invesco SP 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 Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Equity and Invesco SP.
Diversification Opportunities for JPMorgan Equity and Invesco SP
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between JPMorgan and Invesco is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Equity Premium and Invesco SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP 500 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 Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP 500 has no effect on the direction of JPMorgan Equity i.e., JPMorgan Equity and Invesco SP go up and down completely randomly.
Pair Corralation between JPMorgan Equity and Invesco SP
Given the investment horizon of 90 days JPMorgan Equity is expected to generate 1.14 times less return on investment than Invesco SP. But when comparing it to its historical volatility, JPMorgan Equity Premium is 1.09 times less risky than Invesco SP. It trades about 0.31 of its potential returns per unit of risk. Invesco SP 500 is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 4,981 in Invesco SP 500 on August 31, 2024 and sell it today you would earn a total of 186.00 from holding Invesco SP 500 or generate 3.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan Equity Premium vs. Invesco SP 500
Performance |
| Timeline |
| JPMorgan Equity Premium |
| Invesco SP 500 |
JPMorgan Equity and Invesco SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Equity and Invesco SP
The main advantage of trading using opposite JPMorgan Equity and Invesco SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Equity position performs unexpectedly, Invesco SP 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 Invesco SP will offset losses from the drop in Invesco SP'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 |
| Invesco SP vs. iShares Core SP | Invesco SP vs. iShares Core MSCI | Invesco SP vs. iShares Broad USD | Invesco SP vs. iShares Core SP |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |