Correlation Between JPMorgan Chase and WisdomTree SmallCap
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and WisdomTree SmallCap 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 JPMorgan Chase and WisdomTree SmallCap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JPMorgan Chase Co and WisdomTree SmallCap Quality, you can compare the effects of market volatilities on JPMorgan Chase and WisdomTree SmallCap 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 JPMorgan Chase with a short position of WisdomTree SmallCap. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and WisdomTree SmallCap.
Diversification Opportunities for JPMorgan Chase and WisdomTree SmallCap
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between JPMorgan and WisdomTree is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and WisdomTree SmallCap Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree SmallCap and JPMorgan Chase 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 JPMorgan Chase Co are associated (or correlated) with WisdomTree SmallCap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree SmallCap has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and WisdomTree SmallCap go up and down completely randomly.
Pair Corralation between JPMorgan Chase and WisdomTree SmallCap
Considering the 90-day investment horizon JPMorgan Chase Co is expected to generate 1.13 times more return on investment than WisdomTree SmallCap. However, JPMorgan Chase is 1.13 times more volatile than WisdomTree SmallCap Quality. It trades about 0.11 of its potential returns per unit of risk. WisdomTree SmallCap Quality is currently generating about 0.06 per unit of risk. If you would invest 12,534 in JPMorgan Chase Co on August 30, 2024 and sell it today you would earn a total of 12,445 from holding JPMorgan Chase Co or generate 99.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan Chase Co vs. WisdomTree SmallCap Quality
Performance |
| Timeline |
| JPMorgan Chase |
| WisdomTree SmallCap |
JPMorgan Chase and WisdomTree SmallCap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Chase and WisdomTree SmallCap
The main advantage of trading using opposite JPMorgan Chase and WisdomTree SmallCap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, WisdomTree SmallCap 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 WisdomTree SmallCap will offset losses from the drop in WisdomTree SmallCap's long position.| JPMorgan Chase vs. Citigroup | JPMorgan Chase vs. Wells Fargo | JPMorgan Chase vs. Toronto Dominion Bank | JPMorgan Chase vs. Nu Holdings |
| WisdomTree SmallCap vs. WisdomTree Emerging Markets | WisdomTree SmallCap vs. WisdomTree Interest Rate | WisdomTree SmallCap vs. WisdomTree Japan Hedged | WisdomTree SmallCap vs. WisdomTree Interest Rate |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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