Correlation Between NYSE Composite and Jpmorgan Active
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Jpmorgan Active 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 NYSE Composite and Jpmorgan Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Jpmorgan Active Small, you can compare the effects of market volatilities on NYSE Composite and Jpmorgan Active 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 NYSE Composite with a short position of Jpmorgan Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Jpmorgan Active.
Diversification Opportunities for NYSE Composite and Jpmorgan Active
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Jpmorgan is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Jpmorgan Active Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Active Small and NYSE Composite 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 NYSE Composite are associated (or correlated) with Jpmorgan Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Active Small has no effect on the direction of NYSE Composite i.e., NYSE Composite and Jpmorgan Active go up and down completely randomly.
Pair Corralation between NYSE Composite and Jpmorgan Active
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.37 times less return on investment than Jpmorgan Active. But when comparing it to its historical volatility, NYSE Composite is 1.69 times less risky than Jpmorgan Active. It trades about 0.11 of its potential returns per unit of risk. Jpmorgan Active Small is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,388 in Jpmorgan Active Small on August 29, 2024 and sell it today you would earn a total of 1,010 from holding Jpmorgan Active Small or generate 18.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Jpmorgan Active Small
Performance |
| Timeline |
NYSE Composite and Jpmorgan Active Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Jpmorgan Active Small
Pair trading matchups for Jpmorgan Active
Pair Trading with NYSE Composite and Jpmorgan Active
The main advantage of trading using opposite NYSE Composite and Jpmorgan Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Jpmorgan Active 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 Active will offset losses from the drop in Jpmorgan Active's long position.| NYSE Composite vs. Sphere Entertainment Co | NYSE Composite vs. Weibo Corp | NYSE Composite vs. BCE Inc | NYSE Composite vs. Pinterest |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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