Correlation Between Commodities Strategy and Jpmorgan Emerging
Can any of the company-specific risk be diversified away by investing in both Commodities Strategy 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 Commodities Strategy and Jpmorgan Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commodities Strategy Fund and Jpmorgan Emerging Markets, you can compare the effects of market volatilities on Commodities Strategy 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 Commodities Strategy with a short position of Jpmorgan Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commodities Strategy and Jpmorgan Emerging.
Diversification Opportunities for Commodities Strategy and Jpmorgan Emerging
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Commodities and JPMORGAN is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Commodities Strategy Fund 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 Commodities Strategy 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 Commodities Strategy Fund 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 Commodities Strategy i.e., Commodities Strategy and Jpmorgan Emerging go up and down completely randomly.
Pair Corralation between Commodities Strategy and Jpmorgan Emerging
Assuming the 90 days horizon Commodities Strategy Fund is expected to under-perform the Jpmorgan Emerging. In addition to that, Commodities Strategy is 1.1 times more volatile than Jpmorgan Emerging Markets. It trades about -0.02 of its total potential returns per unit of risk. Jpmorgan Emerging Markets is currently generating about 0.0 per unit of volatility. If you would invest 2,968 in Jpmorgan Emerging Markets on September 3, 2024 and sell it today you would lose (32.00) from holding Jpmorgan Emerging Markets or give up 1.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commodities Strategy Fund vs. Jpmorgan Emerging Markets
Performance |
| Timeline |
| Commodities Strategy |
| Jpmorgan Emerging Markets |
Commodities Strategy and Jpmorgan Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commodities Strategy and Jpmorgan Emerging
The main advantage of trading using opposite Commodities Strategy and Jpmorgan Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commodities Strategy 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.The idea behind Commodities Strategy Fund and Jpmorgan Emerging Markets 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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