Correlation Between JPM America and Dow Jones
Can any of the company-specific risk be diversified away by investing in both JPM America and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on JPM America and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPM America and Dow Jones.
Diversification Opportunities for JPM America and Dow Jones
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JPM and Dow is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding JPM America Equity and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of JPM America i.e., JPM America and Dow Jones go up and down completely randomly.
Pair Corralation between JPM America and Dow Jones
Assuming the 90 days trading horizon JPM America is expected to generate 3.74 times less return on investment than Dow Jones. In addition to that, JPM America is 1.11 times more volatile than Dow Jones Industrial. It trades about 0.07 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.3 per unit of volatility. If you would invest 4,270,656 in Dow Jones Industrial on November 5, 2024 and sell it today you would earn a total of 183,810 from holding Dow Jones Industrial or generate 4.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
JPM America Equity vs. Dow Jones Industrial
Performance |
| Timeline |
JPM America and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
JPM America Equity
Pair trading matchups for JPM America
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with JPM America and Dow Jones
The main advantage of trading using opposite JPM America and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPM America position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| JPM America vs. Pareto Nordic Equity | JPM America vs. Esfera Robotics R | JPM America vs. R co Valor F | JPM America vs. CM AM Monplus NE |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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