Correlation Between JPM Research and Dow Jones
Can any of the company-specific risk be diversified away by investing in both JPM Research and Dow Jones 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 Research and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JPM Research Enhanced and Dow Jones Industrial, you can compare the effects of market volatilities on JPM Research and Dow Jones 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 Research with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPM Research and Dow Jones.
Diversification Opportunities for JPM Research and Dow Jones
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between JPM and Dow is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding JPM Research Enhanced and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and JPM Research 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 Research Enhanced are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of JPM Research i.e., JPM Research and Dow Jones go up and down completely randomly.
Pair Corralation between JPM Research and Dow Jones
Assuming the 90 days trading horizon JPM Research Enhanced is expected to generate 1.03 times more return on investment than Dow Jones. However, JPM Research is 1.03 times more volatile than Dow Jones Industrial. It trades about 0.14 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 191,830 in JPM Research Enhanced on August 30, 2024 and sell it today you would earn a total of 76,620 from holding JPM Research Enhanced or generate 39.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 65.93% |
| Values | Daily Returns |
JPM Research Enhanced vs. Dow Jones Industrial
Performance |
| Timeline |
JPM Research and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
JPM Research Enhanced
Pair trading matchups for JPM Research
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with JPM Research and Dow Jones
The main advantage of trading using opposite JPM Research and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPM Research position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| JPM Research vs. JPM BetaBuilders China | JPM Research vs. JPM AC Asia | JPM Research vs. JPM BetaBuilders Treasury | JPM Research vs. JPM Global Research |
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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