Correlation Between AdvisorShares STAR and JPMorgan Equity
Can any of the company-specific risk be diversified away by investing in both AdvisorShares STAR and JPMorgan Equity 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 AdvisorShares STAR and JPMorgan Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AdvisorShares STAR Global and JPMorgan Equity Premium, you can compare the effects of market volatilities on AdvisorShares STAR and JPMorgan Equity 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 AdvisorShares STAR with a short position of JPMorgan Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvisorShares STAR and JPMorgan Equity.
Diversification Opportunities for AdvisorShares STAR and JPMorgan Equity
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AdvisorShares and JPMorgan is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares STAR Global and JPMorgan Equity Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Equity Premium and AdvisorShares STAR 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 AdvisorShares STAR Global are associated (or correlated) with JPMorgan Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Equity Premium has no effect on the direction of AdvisorShares STAR i.e., AdvisorShares STAR and JPMorgan Equity go up and down completely randomly.
Pair Corralation between AdvisorShares STAR and JPMorgan Equity
Given the investment horizon of 90 days AdvisorShares STAR is expected to generate 1.27 times less return on investment than JPMorgan Equity. In addition to that, AdvisorShares STAR is 1.24 times more volatile than JPMorgan Equity Premium. It trades about 0.1 of its total potential returns per unit of risk. JPMorgan Equity Premium is currently generating about 0.15 per unit of volatility. If you would invest 5,425 in JPMorgan Equity Premium on September 13, 2024 and sell it today you would earn a total of 525.00 from holding JPMorgan Equity Premium or generate 9.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AdvisorShares STAR Global vs. JPMorgan Equity Premium
Performance |
| Timeline |
| AdvisorShares STAR Global |
| JPMorgan Equity Premium |
AdvisorShares STAR and JPMorgan Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AdvisorShares STAR and JPMorgan Equity
The main advantage of trading using opposite AdvisorShares STAR and JPMorgan Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdvisorShares STAR position performs unexpectedly, JPMorgan Equity 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 Equity will offset losses from the drop in JPMorgan Equity's long position.| AdvisorShares STAR vs. Global X SP | AdvisorShares STAR vs. Amplify CWP Enhanced | AdvisorShares STAR vs. JPMorgan Nasdaq Equity | AdvisorShares STAR vs. NEOS ETF Trust |
| JPMorgan Equity vs. Global X SP | JPMorgan Equity vs. Amplify CWP Enhanced | JPMorgan Equity vs. JPMorgan Nasdaq Equity | JPMorgan Equity vs. NEOS ETF Trust |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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