Correlation Between Mid Cap and Jpmorgan Emerging
Can any of the company-specific risk be diversified away by investing in both Mid Cap and Jpmorgan Emerging 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 Mid Cap and Jpmorgan Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap 15x Strategy and Jpmorgan Emerging Markets, you can compare the effects of market volatilities on Mid Cap and Jpmorgan Emerging 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 Mid Cap with a short position of Jpmorgan Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Jpmorgan Emerging.
Diversification Opportunities for Mid Cap and Jpmorgan Emerging
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Mid and JPMORGAN is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap 15x Strategy and Jpmorgan Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Emerging Markets and Mid Cap 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 Mid Cap 15x Strategy are associated (or correlated) with Jpmorgan Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Emerging Markets has no effect on the direction of Mid Cap i.e., Mid Cap and Jpmorgan Emerging go up and down completely randomly.
Pair Corralation between Mid Cap and Jpmorgan Emerging
Assuming the 90 days horizon Mid Cap 15x Strategy is expected to generate 1.69 times more return on investment than Jpmorgan Emerging. However, Mid Cap is 1.69 times more volatile than Jpmorgan Emerging Markets. It trades about 0.07 of its potential returns per unit of risk. Jpmorgan Emerging Markets is currently generating about 0.02 per unit of risk. If you would invest 10,247 in Mid Cap 15x Strategy on September 4, 2024 and sell it today you would earn a total of 4,558 from holding Mid Cap 15x Strategy or generate 44.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Cap 15x Strategy vs. Jpmorgan Emerging Markets
Performance |
| Timeline |
| Mid Cap 15x |
| Jpmorgan Emerging Markets |
Mid Cap and Jpmorgan Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and Jpmorgan Emerging
The main advantage of trading using opposite Mid Cap and Jpmorgan Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap position performs unexpectedly, Jpmorgan Emerging 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 Emerging will offset losses from the drop in Jpmorgan Emerging's long position.| Mid Cap vs. Issachar Fund Class | Mid Cap vs. Balanced Fund Investor | Mid Cap vs. Semiconductor Ultrasector Profund | Mid Cap vs. Qs Growth Fund |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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