Correlation Between FlexShares STOXX and JP Morgan
Can any of the company-specific risk be diversified away by investing in both FlexShares STOXX 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 FlexShares STOXX and JP Morgan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FlexShares STOXX Global and JP Morgan Exchange Traded, you can compare the effects of market volatilities on FlexShares STOXX 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 FlexShares STOXX with a short position of JP Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares STOXX and JP Morgan.
Diversification Opportunities for FlexShares STOXX and JP Morgan
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FlexShares and BLLD is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares STOXX Global 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 FlexShares STOXX 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 FlexShares STOXX Global 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 FlexShares STOXX i.e., FlexShares STOXX and JP Morgan go up and down completely randomly.
Pair Corralation between FlexShares STOXX and JP Morgan
Given the investment horizon of 90 days FlexShares STOXX is expected to generate 1.71 times less return on investment than JP Morgan. But when comparing it to its historical volatility, FlexShares STOXX Global is 1.07 times less risky than JP Morgan. It trades about 0.11 of its potential returns per unit of risk. JP Morgan Exchange Traded is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 4,739 in JP Morgan Exchange Traded on December 24, 2024 and sell it today you would earn a total of 138.10 from holding JP Morgan Exchange Traded or generate 2.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FlexShares STOXX Global vs. JP Morgan Exchange Traded
Performance |
| Timeline |
| FlexShares STOXX Global |
| JP Morgan Exchange |
FlexShares STOXX and JP Morgan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares STOXX and JP Morgan
The main advantage of trading using opposite FlexShares STOXX and JP Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares STOXX 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.| FlexShares STOXX vs. ProShares DJ Brookfield | FlexShares STOXX vs. iShares Global Infrastructure | FlexShares STOXX vs. SPDR SP Global | FlexShares STOXX vs. iShares Infrastructure ETF |
| JP Morgan vs. Strategy Shares | JP Morgan vs. Freedom Day Dividend | JP Morgan vs. Franklin Templeton ETF | JP Morgan vs. iShares MSCI China |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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