Correlation Between JPM Europe and JPM America
Can any of the company-specific risk be diversified away by investing in both JPM Europe and JPM America 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 Europe and JPM America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JPM Europe Small and JPM America Equity, you can compare the effects of market volatilities on JPM Europe and JPM America 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 Europe with a short position of JPM America. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPM Europe and JPM America.
Diversification Opportunities for JPM Europe and JPM America
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JPM and JPM is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding JPM Europe Small and JPM America Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM America Equity and JPM Europe 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 Europe Small are associated (or correlated) with JPM America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM America Equity has no effect on the direction of JPM Europe i.e., JPM Europe and JPM America go up and down completely randomly.
Pair Corralation between JPM Europe and JPM America
Assuming the 90 days trading horizon JPM Europe Small is expected to generate 0.97 times more return on investment than JPM America. However, JPM Europe Small is 1.03 times less risky than JPM America. It trades about 0.17 of its potential returns per unit of risk. JPM America Equity is currently generating about 0.1 per unit of risk. If you would invest 9,010 in JPM Europe Small on November 4, 2024 and sell it today you would earn a total of 269.00 from holding JPM Europe Small or generate 2.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPM Europe Small vs. JPM America Equity
Performance |
| Timeline |
| JPM Europe Small |
| JPM America Equity |
JPM Europe and JPM America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPM Europe and JPM America
The main advantage of trading using opposite JPM Europe and JPM America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPM Europe position performs unexpectedly, JPM America 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 America will offset losses from the drop in JPM America's long position.| JPM Europe vs. Esfera Robotics R | JPM Europe vs. R co Valor F | JPM Europe vs. CM AM Monplus NE | JPM Europe vs. IE00B0H4TS55 |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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