Correlation Between Jpmorgan Short-intermedia and Transamerica Intermediate
Can any of the company-specific risk be diversified away by investing in both Jpmorgan Short-intermedia and Transamerica Intermediate 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 Jpmorgan Short-intermedia and Transamerica Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jpmorgan Short Intermediate Municipal and Transamerica Intermediate Muni, you can compare the effects of market volatilities on Jpmorgan Short-intermedia and Transamerica Intermediate 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 Jpmorgan Short-intermedia with a short position of Transamerica Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan Short-intermedia and Transamerica Intermediate.
Diversification Opportunities for Jpmorgan Short-intermedia and Transamerica Intermediate
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between JPMORGAN and Transamerica is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Short Intermediate Mu and Transamerica Intermediate Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Intermediate and Jpmorgan Short-intermedia 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 Jpmorgan Short Intermediate Municipal are associated (or correlated) with Transamerica Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Intermediate has no effect on the direction of Jpmorgan Short-intermedia i.e., Jpmorgan Short-intermedia and Transamerica Intermediate go up and down completely randomly.
Pair Corralation between Jpmorgan Short-intermedia and Transamerica Intermediate
Assuming the 90 days horizon Jpmorgan Short-intermedia is expected to generate 2.32 times less return on investment than Transamerica Intermediate. But when comparing it to its historical volatility, Jpmorgan Short Intermediate Municipal is 2.06 times less risky than Transamerica Intermediate. It trades about 0.07 of its potential returns per unit of risk. Transamerica Intermediate Muni is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 997.00 in Transamerica Intermediate Muni on September 2, 2024 and sell it today you would earn a total of 91.00 from holding Transamerica Intermediate Muni or generate 9.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jpmorgan Short Intermediate Mu vs. Transamerica Intermediate Muni
Performance |
| Timeline |
| Jpmorgan Short-intermedia |
| Transamerica Intermediate |
Jpmorgan Short-intermedia and Transamerica Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jpmorgan Short-intermedia and Transamerica Intermediate
The main advantage of trading using opposite Jpmorgan Short-intermedia and Transamerica Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jpmorgan Short-intermedia position performs unexpectedly, Transamerica Intermediate 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 Transamerica Intermediate will offset losses from the drop in Transamerica Intermediate's long position.The idea behind Jpmorgan Short Intermediate Municipal and Transamerica Intermediate Muni 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.
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |