Correlation Between First Trust and JP Morgan
Can any of the company-specific risk be diversified away by investing in both First Trust and JP Morgan 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 First Trust and JP Morgan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Low and JP Morgan Exchange Traded, you can compare the effects of market volatilities on First Trust and JP Morgan 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 First Trust with a short position of JP Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and JP Morgan.
Diversification Opportunities for First Trust and JP Morgan
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and BBSB is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Low and JP Morgan Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JP Morgan Exchange and First Trust 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 First Trust Low are associated (or correlated) with JP Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JP Morgan Exchange has no effect on the direction of First Trust i.e., First Trust and JP Morgan go up and down completely randomly.
Pair Corralation between First Trust and JP Morgan
Given the investment horizon of 90 days First Trust Low is expected to generate 2.16 times more return on investment than JP Morgan. However, First Trust is 2.16 times more volatile than JP Morgan Exchange Traded. It trades about 0.03 of its potential returns per unit of risk. JP Morgan Exchange Traded is currently generating about 0.04 per unit of risk. If you would invest 4,871 in First Trust Low on August 29, 2024 and sell it today you would earn a total of 6.00 from holding First Trust Low or generate 0.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
First Trust Low vs. JP Morgan Exchange Traded
Performance |
| Timeline |
| First Trust Low |
| JP Morgan Exchange |
First Trust and JP Morgan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and JP Morgan
The main advantage of trading using opposite First Trust and JP Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, JP Morgan 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 JP Morgan will offset losses from the drop in JP Morgan's long position.| First Trust vs. FlexShares Disciplined Duration | First Trust vs. Vanguard Mortgage Backed Securities | First Trust vs. Simplify Exchange Traded | First Trust vs. WisdomTree Mortgage Plus |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |