Correlation Between Jpmorgan Growth and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Jpmorgan Growth and Legg Mason 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 Growth and Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jpmorgan Growth Advantage and Legg Mason Partners, you can compare the effects of market volatilities on Jpmorgan Growth and Legg Mason 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 Growth with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan Growth and Legg Mason.
Diversification Opportunities for Jpmorgan Growth and Legg Mason
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Jpmorgan and Legg is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Growth Advantage and Legg Mason Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Partners and Jpmorgan Growth 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 Growth Advantage are associated (or correlated) with Legg Mason. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legg Mason Partners has no effect on the direction of Jpmorgan Growth i.e., Jpmorgan Growth and Legg Mason go up and down completely randomly.
Pair Corralation between Jpmorgan Growth and Legg Mason
Assuming the 90 days horizon Jpmorgan Growth Advantage is expected to generate 1.61 times more return on investment than Legg Mason. However, Jpmorgan Growth is 1.61 times more volatile than Legg Mason Partners. It trades about 0.31 of its potential returns per unit of risk. Legg Mason Partners is currently generating about 0.37 per unit of risk. If you would invest 2,986 in Jpmorgan Growth Advantage on September 3, 2024 and sell it today you would earn a total of 190.00 from holding Jpmorgan Growth Advantage or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jpmorgan Growth Advantage vs. Legg Mason Partners
Performance |
| Timeline |
| Jpmorgan Growth Advantage |
| Legg Mason Partners |
Jpmorgan Growth and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jpmorgan Growth and Legg Mason
The main advantage of trading using opposite Jpmorgan Growth and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jpmorgan Growth position performs unexpectedly, Legg Mason 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 Legg Mason will offset losses from the drop in Legg Mason's long position.| Jpmorgan Growth vs. Alger Health Sciences | Jpmorgan Growth vs. Health Biotchnology Portfolio | Jpmorgan Growth vs. Eventide Healthcare Life | Jpmorgan Growth vs. Blackrock Health Sciences |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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