Correlation Between Northern Small and Jpmorgan High
Can any of the company-specific risk be diversified away by investing in both Northern Small and Jpmorgan High 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 High 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 High Yield, you can compare the effects of market volatilities on Northern Small and Jpmorgan High 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 High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Small and Jpmorgan High.
Diversification Opportunities for Northern Small and Jpmorgan High
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Northern and Jpmorgan is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Northern Small Cap and Jpmorgan High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan High Yield 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 High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan High Yield has no effect on the direction of Northern Small i.e., Northern Small and Jpmorgan High go up and down completely randomly.
Pair Corralation between Northern Small and Jpmorgan High
Assuming the 90 days horizon Northern Small Cap is expected to generate 8.7 times more return on investment than Jpmorgan High. However, Northern Small is 8.7 times more volatile than Jpmorgan High Yield. It trades about 0.11 of its potential returns per unit of risk. Jpmorgan High Yield is currently generating about 0.35 per unit of risk. If you would invest 1,328 in Northern Small Cap on September 12, 2024 and sell it today you would earn a total of 258.00 from holding Northern Small Cap or generate 19.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Small Cap vs. Jpmorgan High Yield
Performance |
| Timeline |
| Northern Small Cap |
| Jpmorgan High Yield |
Northern Small and Jpmorgan High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Small and Jpmorgan High
The main advantage of trading using opposite Northern Small and Jpmorgan High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Small position performs unexpectedly, Jpmorgan High 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 High will offset losses from the drop in Jpmorgan High's long position.| Northern Small vs. Aam Select Income | Northern Small vs. Rbc Microcap Value | Northern Small vs. Rbb Fund | Northern Small vs. Acm Dynamic Opportunity |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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