Correlation Between JPMorgan USD and Global X

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Can any of the company-specific risk be diversified away by investing in both JPMorgan USD and Global X 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 USD and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JPMorgan USD Emerging and Global X Emerging, you can compare the effects of market volatilities on JPMorgan USD and Global X 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 USD with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan USD and Global X.

Diversification Opportunities for JPMorgan USD and Global X

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between JPMorgan and Global is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan USD Emerging and Global X Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Emerging and JPMorgan USD 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 USD Emerging are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Emerging has no effect on the direction of JPMorgan USD i.e., JPMorgan USD and Global X go up and down completely randomly.

Pair Corralation between JPMorgan USD and Global X

Given the investment horizon of 90 days JPMorgan USD is expected to generate 1.47 times less return on investment than Global X. But when comparing it to its historical volatility, JPMorgan USD Emerging is 1.06 times less risky than Global X. It trades about 0.05 of its potential returns per unit of risk. Global X Emerging is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,955  in Global X Emerging on August 26, 2024 and sell it today you would earn a total of  348.00  from holding Global X Emerging or generate 17.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

JPMorgan USD Emerging  vs.  Global X Emerging

 Performance 
       Timeline  
JPMorgan USD Emerging 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days JPMorgan USD Emerging has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, JPMorgan USD is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Global X Emerging 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Global X Emerging has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Global X is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

JPMorgan USD and Global X Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JPMorgan USD and Global X

The main advantage of trading using opposite JPMorgan USD and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan USD position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.
The idea behind JPMorgan USD Emerging and Global X Emerging pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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