Correlation Between JPMorgan Municipal and PIMCO ETF
Can any of the company-specific risk be diversified away by investing in both JPMorgan Municipal and PIMCO ETF 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 Municipal and PIMCO ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JPMorgan Municipal and PIMCO ETF Trust, you can compare the effects of market volatilities on JPMorgan Municipal and PIMCO ETF 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 Municipal with a short position of PIMCO ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Municipal and PIMCO ETF.
Diversification Opportunities for JPMorgan Municipal and PIMCO ETF
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between JPMorgan and PIMCO is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Municipal and PIMCO ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO ETF Trust and JPMorgan Municipal 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 Municipal are associated (or correlated) with PIMCO ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO ETF Trust has no effect on the direction of JPMorgan Municipal i.e., JPMorgan Municipal and PIMCO ETF go up and down completely randomly.
Pair Corralation between JPMorgan Municipal and PIMCO ETF
Given the investment horizon of 90 days JPMorgan Municipal is expected to generate 0.76 times more return on investment than PIMCO ETF. However, JPMorgan Municipal is 1.32 times less risky than PIMCO ETF. It trades about -0.03 of its potential returns per unit of risk. PIMCO ETF Trust is currently generating about -0.03 per unit of risk. If you would invest 5,097 in JPMorgan Municipal on August 29, 2024 and sell it today you would lose (20.00) from holding JPMorgan Municipal or give up 0.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan Municipal vs. PIMCO ETF Trust
Performance |
| Timeline |
| JPMorgan Municipal |
| PIMCO ETF Trust |
JPMorgan Municipal and PIMCO ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Municipal and PIMCO ETF
The main advantage of trading using opposite JPMorgan Municipal and PIMCO ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Municipal position performs unexpectedly, PIMCO ETF 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 PIMCO ETF will offset losses from the drop in PIMCO ETF's long position.| JPMorgan Municipal vs. JPMorgan Ultra Short Municipal | JPMorgan Municipal vs. JPMorgan USD Emerging | JPMorgan Municipal vs. iShares Short Maturity | JPMorgan Municipal vs. IQ MacKay Municipal |
| PIMCO ETF vs. BlackRock Intermediate Muni | PIMCO ETF vs. SSGA Active Trust | PIMCO ETF vs. SSGA Active Trust | PIMCO ETF vs. SPDR Nuveen Municipal |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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