Correlation Between Russell Australian and JPMorgan Global
Can any of the company-specific risk be diversified away by investing in both Russell Australian and JPMorgan Global 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 Russell Australian and JPMorgan Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Russell Australian Government and JPMorgan Global Equity, you can compare the effects of market volatilities on Russell Australian and JPMorgan Global 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 Russell Australian with a short position of JPMorgan Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Russell Australian and JPMorgan Global.
Diversification Opportunities for Russell Australian and JPMorgan Global
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Russell and JPMorgan is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Russell Australian Government and JPMorgan Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Global Equity and Russell Australian 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 Russell Australian Government are associated (or correlated) with JPMorgan Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Global Equity has no effect on the direction of Russell Australian i.e., Russell Australian and JPMorgan Global go up and down completely randomly.
Pair Corralation between Russell Australian and JPMorgan Global
Assuming the 90 days trading horizon Russell Australian is expected to generate 6.75 times less return on investment than JPMorgan Global. But when comparing it to its historical volatility, Russell Australian Government is 1.24 times less risky than JPMorgan Global. It trades about 0.02 of its potential returns per unit of risk. JPMorgan Global Equity is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 4,893 in JPMorgan Global Equity on September 2, 2024 and sell it today you would earn a total of 261.00 from holding JPMorgan Global Equity or generate 5.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 19.63% |
| Values | Daily Returns |
Russell Australian Government vs. JPMorgan Global Equity
Performance |
| Timeline |
| Russell Australian |
| JPMorgan Global Equity |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Russell Australian and JPMorgan Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Russell Australian and JPMorgan Global
The main advantage of trading using opposite Russell Australian and JPMorgan Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Russell Australian position performs unexpectedly, JPMorgan Global 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 Global will offset losses from the drop in JPMorgan Global's long position.The idea behind Russell Australian Government and JPMorgan Global Equity 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.
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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