Correlation Between Jpmorgan Small and Government Long
Can any of the company-specific risk be diversified away by investing in both Jpmorgan Small and Government Long 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 Small and Government Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jpmorgan Small Cap and Government Long Bond, you can compare the effects of market volatilities on Jpmorgan Small and Government Long 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 Small with a short position of Government Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan Small and Government Long.
Diversification Opportunities for Jpmorgan Small and Government Long
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between JPMORGAN and Government is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Small Cap and Government Long Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Government Long Bond and Jpmorgan Small 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 Small Cap are associated (or correlated) with Government Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Government Long Bond has no effect on the direction of Jpmorgan Small i.e., Jpmorgan Small and Government Long go up and down completely randomly.
Pair Corralation between Jpmorgan Small and Government Long
Assuming the 90 days horizon Jpmorgan Small Cap is expected to generate 1.05 times more return on investment than Government Long. However, Jpmorgan Small is 1.05 times more volatile than Government Long Bond. It trades about 0.05 of its potential returns per unit of risk. Government Long Bond is currently generating about -0.02 per unit of risk. If you would invest 1,774 in Jpmorgan Small Cap on August 31, 2024 and sell it today you would earn a total of 603.00 from holding Jpmorgan Small Cap or generate 33.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jpmorgan Small Cap vs. Government Long Bond
Performance |
| Timeline |
| Jpmorgan Small Cap |
| Government Long Bond |
Jpmorgan Small and Government Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jpmorgan Small and Government Long
The main advantage of trading using opposite Jpmorgan Small and Government Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jpmorgan Small position performs unexpectedly, Government Long 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 Government Long will offset losses from the drop in Government Long's long position.| Jpmorgan Small vs. The Hartford Midcap | Jpmorgan Small vs. Mfs Emerging Markets | Jpmorgan Small vs. Wells Fargo Special | Jpmorgan Small vs. Baron Emerging Markets |
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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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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