Correlation Between JP Morgan and First Trust
Can any of the company-specific risk be diversified away by investing in both JP Morgan and First Trust 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 JP Morgan and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JP Morgan Exchange Traded and First Trust TCW, you can compare the effects of market volatilities on JP Morgan and First Trust 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 JP Morgan with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of JP Morgan and First Trust.
Diversification Opportunities for JP Morgan and First Trust
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JPIE and First is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding JP Morgan Exchange Traded and First Trust TCW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust TCW and JP Morgan 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 JP Morgan Exchange Traded are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust TCW has no effect on the direction of JP Morgan i.e., JP Morgan and First Trust go up and down completely randomly.
Pair Corralation between JP Morgan and First Trust
Given the investment horizon of 90 days JP Morgan is expected to generate 2.75 times less return on investment than First Trust. But when comparing it to its historical volatility, JP Morgan Exchange Traded is 4.44 times less risky than First Trust. It trades about 0.47 of its potential returns per unit of risk. First Trust TCW is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 2,076 in First Trust TCW on November 30, 2024 and sell it today you would earn a total of 55.00 from holding First Trust TCW or generate 2.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JP Morgan Exchange Traded vs. First Trust TCW
Performance |
| Timeline |
| JP Morgan Exchange |
| First Trust TCW |
JP Morgan and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JP Morgan and First Trust
The main advantage of trading using opposite JP Morgan and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JP Morgan position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| JP Morgan vs. JPMorgan Core Plus | ||
| JP Morgan vs. JPMorgan International Bond | ||
| JP Morgan vs. JPMorgan Ultra Short Income | ||
| JP Morgan vs. JPMorgan Short Duration |
| First Trust vs. First Trust TCW | ||
| First Trust vs. First Trust TCW | ||
| First Trust vs. First Trust Ultra | ||
| First Trust vs. First Trust Short |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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