Correlation Between Jpmorgan Smartretirement* and American Growth
Can any of the company-specific risk be diversified away by investing in both Jpmorgan Smartretirement* and American Growth 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 Smartretirement* and American Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jpmorgan Smartretirement Blend and American Growth Fund, you can compare the effects of market volatilities on Jpmorgan Smartretirement* and American Growth 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 Smartretirement* with a short position of American Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan Smartretirement* and American Growth.
Diversification Opportunities for Jpmorgan Smartretirement* and American Growth
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Jpmorgan and American is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Smartretirement Blend and American Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Growth and Jpmorgan Smartretirement* 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 Smartretirement Blend are associated (or correlated) with American Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Growth has no effect on the direction of Jpmorgan Smartretirement* i.e., Jpmorgan Smartretirement* and American Growth go up and down completely randomly.
Pair Corralation between Jpmorgan Smartretirement* and American Growth
Assuming the 90 days horizon Jpmorgan Smartretirement* is expected to generate 1.76 times less return on investment than American Growth. But when comparing it to its historical volatility, Jpmorgan Smartretirement Blend is 1.81 times less risky than American Growth. It trades about 0.11 of its potential returns per unit of risk. American Growth Fund is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 560.00 in American Growth Fund on September 3, 2024 and sell it today you would earn a total of 76.00 from holding American Growth Fund or generate 13.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jpmorgan Smartretirement Blend vs. American Growth Fund
Performance |
| Timeline |
| Jpmorgan Smartretirement* |
| American Growth |
Jpmorgan Smartretirement* and American Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jpmorgan Smartretirement* and American Growth
The main advantage of trading using opposite Jpmorgan Smartretirement* and American Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jpmorgan Smartretirement* position performs unexpectedly, American Growth 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 American Growth will offset losses from the drop in American Growth's long position.The idea behind Jpmorgan Smartretirement Blend and American Growth Fund 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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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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