Correlation Between JPM Global and JPM Emerging
Can any of the company-specific risk be diversified away by investing in both JPM Global and JPM Emerging 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 Global and JPM Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JPM Global Natural and JPM Emerging Markets, you can compare the effects of market volatilities on JPM Global and JPM Emerging 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 Global with a short position of JPM Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPM Global and JPM Emerging.
Diversification Opportunities for JPM Global and JPM Emerging
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between JPM and JPM is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding JPM Global Natural and JPM Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM Emerging Markets and JPM Global 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 Global Natural are associated (or correlated) with JPM Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM Emerging Markets has no effect on the direction of JPM Global i.e., JPM Global and JPM Emerging go up and down completely randomly.
Pair Corralation between JPM Global and JPM Emerging
Assuming the 90 days trading horizon JPM Global Natural is expected to generate 1.34 times more return on investment than JPM Emerging. However, JPM Global is 1.34 times more volatile than JPM Emerging Markets. It trades about 0.07 of its potential returns per unit of risk. JPM Emerging Markets is currently generating about -0.05 per unit of risk. If you would invest 2,115 in JPM Global Natural on August 30, 2024 and sell it today you would earn a total of 76.00 from holding JPM Global Natural or generate 3.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.62% |
| Values | Daily Returns |
JPM Global Natural vs. JPM Emerging Markets
Performance |
| Timeline |
| JPM Global Natural |
| JPM Emerging Markets |
JPM Global and JPM Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPM Global and JPM Emerging
The main advantage of trading using opposite JPM Global and JPM Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPM Global position performs unexpectedly, JPM Emerging 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 Emerging will offset losses from the drop in JPM Emerging's long position.| JPM Global vs. JPM Europe Small | JPM Global vs. JPM Emerging Markets | JPM Global vs. Esfera Robotics R | JPM Global vs. R co Valor F |
| JPM Emerging vs. Renaissance Europe C | JPM Emerging vs. Superior Plus Corp | JPM Emerging vs. Origin Agritech | JPM Emerging vs. Identiv |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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