Correlation Between Northern Small and Jpmorgan Preferred
Can any of the company-specific risk be diversified away by investing in both Northern Small and Jpmorgan Preferred 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 Northern Small and Jpmorgan Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Small Cap and Jpmorgan Preferred And, you can compare the effects of market volatilities on Northern Small and Jpmorgan Preferred 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 Northern Small with a short position of Jpmorgan Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Small and Jpmorgan Preferred.
Diversification Opportunities for Northern Small and Jpmorgan Preferred
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NORTHERN and Jpmorgan is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Northern Small Cap and Jpmorgan Preferred And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Preferred And and Northern Small 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 Northern Small Cap are associated (or correlated) with Jpmorgan Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Preferred And has no effect on the direction of Northern Small i.e., Northern Small and Jpmorgan Preferred go up and down completely randomly.
Pair Corralation between Northern Small and Jpmorgan Preferred
Assuming the 90 days horizon Northern Small Cap is expected to generate 6.66 times more return on investment than Jpmorgan Preferred. However, Northern Small is 6.66 times more volatile than Jpmorgan Preferred And. It trades about 0.09 of its potential returns per unit of risk. Jpmorgan Preferred And is currently generating about 0.31 per unit of risk. If you would invest 1,163 in Northern Small Cap on September 4, 2024 and sell it today you would earn a total of 456.00 from holding Northern Small Cap or generate 39.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.66% |
| Values | Daily Returns |
Northern Small Cap vs. Jpmorgan Preferred And
Performance |
| Timeline |
| Northern Small Cap |
| Jpmorgan Preferred And |
Northern Small and Jpmorgan Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Small and Jpmorgan Preferred
The main advantage of trading using opposite Northern Small and Jpmorgan Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Small position performs unexpectedly, Jpmorgan Preferred 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 Preferred will offset losses from the drop in Jpmorgan Preferred's long position.| Northern Small vs. Northern Bond Index | Northern Small vs. Northern E Bond | Northern Small vs. Northern Fixed Income | Northern Small vs. Northern Income Equity |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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