Correlation Between JPMorgan International and SPDR FTSE
Can any of the company-specific risk be diversified away by investing in both JPMorgan International and SPDR FTSE 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 International and SPDR FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JPMorgan International Bond and SPDR FTSE International, you can compare the effects of market volatilities on JPMorgan International and SPDR FTSE 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 International with a short position of SPDR FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan International and SPDR FTSE.
Diversification Opportunities for JPMorgan International and SPDR FTSE
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JPMorgan and SPDR is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan International Bond and SPDR FTSE International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR FTSE International and JPMorgan International 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 International Bond are associated (or correlated) with SPDR FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR FTSE International has no effect on the direction of JPMorgan International i.e., JPMorgan International and SPDR FTSE go up and down completely randomly.
Pair Corralation between JPMorgan International and SPDR FTSE
Given the investment horizon of 90 days JPMorgan International Bond is expected to generate 0.41 times more return on investment than SPDR FTSE. However, JPMorgan International Bond is 2.45 times less risky than SPDR FTSE. It trades about 0.08 of its potential returns per unit of risk. SPDR FTSE International is currently generating about 0.0 per unit of risk. If you would invest 4,282 in JPMorgan International Bond on August 28, 2024 and sell it today you would earn a total of 514.00 from holding JPMorgan International Bond or generate 12.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan International Bond vs. SPDR FTSE International
Performance |
| Timeline |
| JPMorgan International |
| SPDR FTSE International |
JPMorgan International and SPDR FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan International and SPDR FTSE
The main advantage of trading using opposite JPMorgan International and SPDR FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan International position performs unexpectedly, SPDR FTSE 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 SPDR FTSE will offset losses from the drop in SPDR FTSE's long position.The idea behind JPMorgan International Bond and SPDR FTSE International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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