Correlation Between Nationwide Inflation-protec and Jpmorgan Smartretirement
Can any of the company-specific risk be diversified away by investing in both Nationwide Inflation-protec and Jpmorgan Smartretirement 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 Nationwide Inflation-protec and Jpmorgan Smartretirement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nationwide Inflation Protected Securities and Jpmorgan Smartretirement 2045, you can compare the effects of market volatilities on Nationwide Inflation-protec and Jpmorgan Smartretirement 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 Nationwide Inflation-protec with a short position of Jpmorgan Smartretirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Inflation-protec and Jpmorgan Smartretirement.
Diversification Opportunities for Nationwide Inflation-protec and Jpmorgan Smartretirement
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NATIONWIDE and Jpmorgan is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Inflation Protected and Jpmorgan Smartretirement 2045 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Smartretirement and Nationwide Inflation-protec 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 Nationwide Inflation Protected Securities are associated (or correlated) with Jpmorgan Smartretirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Smartretirement has no effect on the direction of Nationwide Inflation-protec i.e., Nationwide Inflation-protec and Jpmorgan Smartretirement go up and down completely randomly.
Pair Corralation between Nationwide Inflation-protec and Jpmorgan Smartretirement
Assuming the 90 days horizon Nationwide Inflation-protec is expected to generate 13.53 times less return on investment than Jpmorgan Smartretirement. But when comparing it to its historical volatility, Nationwide Inflation Protected Securities is 2.24 times less risky than Jpmorgan Smartretirement. It trades about 0.02 of its potential returns per unit of risk. Jpmorgan Smartretirement 2045 is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,300 in Jpmorgan Smartretirement 2045 on August 31, 2024 and sell it today you would earn a total of 37.00 from holding Jpmorgan Smartretirement 2045 or generate 1.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nationwide Inflation Protected vs. Jpmorgan Smartretirement 2045
Performance |
| Timeline |
| Nationwide Inflation-protec |
| Jpmorgan Smartretirement |
Nationwide Inflation-protec and Jpmorgan Smartretirement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Inflation-protec and Jpmorgan Smartretirement
The main advantage of trading using opposite Nationwide Inflation-protec and Jpmorgan Smartretirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Inflation-protec position performs unexpectedly, Jpmorgan Smartretirement 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 Jpmorgan Smartretirement will offset losses from the drop in Jpmorgan Smartretirement's long position.The idea behind Nationwide Inflation Protected Securities and Jpmorgan Smartretirement 2045 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.
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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