Correlation Between JPM America and JPM Global
Can any of the company-specific risk be diversified away by investing in both JPM America and JPM Global 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 JPM Global 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 JPM Global Natural, you can compare the effects of market volatilities on JPM America and JPM Global 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 JPM Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPM America and JPM Global.
Diversification Opportunities for JPM America and JPM Global
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JPM and JPM is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding JPM America Equity and JPM Global Natural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM Global Natural 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 JPM Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM Global Natural has no effect on the direction of JPM America i.e., JPM America and JPM Global go up and down completely randomly.
Pair Corralation between JPM America and JPM Global
Assuming the 90 days trading horizon JPM America Equity is expected to generate 0.93 times more return on investment than JPM Global. However, JPM America Equity is 1.07 times less risky than JPM Global. It trades about 0.1 of its potential returns per unit of risk. JPM Global Natural is currently generating about 0.06 per unit of risk. If you would invest 36,013 in JPM America Equity on September 4, 2024 and sell it today you would earn a total of 8,103 from holding JPM America Equity or generate 22.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.51% |
| Values | Daily Returns |
JPM America Equity vs. JPM Global Natural
Performance |
| Timeline |
| JPM America Equity |
| JPM Global Natural |
JPM America and JPM Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPM America and JPM Global
The main advantage of trading using opposite JPM America and JPM Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPM America position performs unexpectedly, JPM Global 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 JPM Global will offset losses from the drop in JPM Global's long position.| JPM America vs. JPM Global Natural | JPM America vs. JPM Europe Small | JPM America vs. JPM Emerging Markets | JPM America vs. Esfera Robotics R |
| JPM Global vs. Groupama Entreprises N | JPM Global vs. Renaissance Europe C | JPM Global vs. Superior Plus Corp | JPM Global vs. Origin Agritech |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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