Correlation Between JPM America and BerolinaCapital Premium
Can any of the company-specific risk be diversified away by investing in both JPM America and BerolinaCapital Premium 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 JPM America and BerolinaCapital Premium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JPM America Equity and BerolinaCapital Premium, you can compare the effects of market volatilities on JPM America and BerolinaCapital Premium 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 JPM America with a short position of BerolinaCapital Premium. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPM America and BerolinaCapital Premium.
Diversification Opportunities for JPM America and BerolinaCapital Premium
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between JPM and BerolinaCapital is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding JPM America Equity and BerolinaCapital Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BerolinaCapital Premium and JPM America 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 JPM America Equity are associated (or correlated) with BerolinaCapital Premium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BerolinaCapital Premium has no effect on the direction of JPM America i.e., JPM America and BerolinaCapital Premium go up and down completely randomly.
Pair Corralation between JPM America and BerolinaCapital Premium
Assuming the 90 days trading horizon JPM America Equity is expected to generate 1.11 times more return on investment than BerolinaCapital Premium. However, JPM America is 1.11 times more volatile than BerolinaCapital Premium. It trades about 0.1 of its potential returns per unit of risk. BerolinaCapital Premium is currently generating about 0.05 per unit of risk. If you would invest 36,013 in JPM America Equity on August 27, 2024 and sell it today you would earn a total of 7,759 from holding JPM America Equity or generate 21.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 71.07% |
| Values | Daily Returns |
JPM America Equity vs. BerolinaCapital Premium
Performance |
| Timeline |
| JPM America Equity |
| BerolinaCapital Premium |
JPM America and BerolinaCapital Premium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPM America and BerolinaCapital Premium
The main advantage of trading using opposite JPM America and BerolinaCapital Premium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPM America position performs unexpectedly, BerolinaCapital Premium 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 BerolinaCapital Premium will offset losses from the drop in BerolinaCapital Premium's long position.| JPM America vs. Superior Plus Corp | JPM America vs. Origin Agritech | JPM America vs. Identiv | JPM America vs. INTUITIVE SURGICAL |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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