Correlation Between JPM Emerging and JPM Global
Can any of the company-specific risk be diversified away by investing in both JPM Emerging 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 Emerging 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 Emerging Markets and JPM Global Natural, you can compare the effects of market volatilities on JPM Emerging 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 Emerging with a short position of JPM Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPM Emerging and JPM Global.
Diversification Opportunities for JPM Emerging and JPM Global
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between JPM and JPM is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding JPM Emerging Markets 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 Emerging 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 Emerging Markets 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 Emerging i.e., JPM Emerging and JPM Global go up and down completely randomly.
Pair Corralation between JPM Emerging and JPM Global
Assuming the 90 days trading horizon JPM Emerging is expected to generate 1.3 times less return on investment than JPM Global. But when comparing it to its historical volatility, JPM Emerging Markets is 1.18 times less risky than JPM Global. It trades about 0.03 of its potential returns per unit of risk. JPM Global Natural is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,959 in JPM Global Natural on November 28, 2024 and sell it today you would earn a total of 189.00 from holding JPM Global Natural or generate 9.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.23% |
| Values | Daily Returns |
JPM Emerging Markets vs. JPM Global Natural
Performance |
| Timeline |
| JPM Emerging Markets |
| JPM Global Natural |
JPM Emerging and JPM Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPM Emerging and JPM Global
The main advantage of trading using opposite JPM Emerging and JPM Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPM Emerging 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 Emerging vs. Groupama Entreprises N | JPM Emerging vs. Renaissance Europe C | JPM Emerging vs. Superior Plus Corp | JPM Emerging vs. Origin Agritech |
| 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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