Correlation Between Western Asset and Jpmorgan Research
Can any of the company-specific risk be diversified away by investing in both Western Asset and Jpmorgan Research 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 Western Asset and Jpmorgan Research into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Diversified and Jpmorgan Research Equity, you can compare the effects of market volatilities on Western Asset and Jpmorgan Research 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 Western Asset with a short position of Jpmorgan Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Jpmorgan Research.
Diversification Opportunities for Western Asset and Jpmorgan Research
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Jpmorgan is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Jpmorgan Research Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Research Equity and Western Asset 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 Western Asset Diversified are associated (or correlated) with Jpmorgan Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Research Equity has no effect on the direction of Western Asset i.e., Western Asset and Jpmorgan Research go up and down completely randomly.
Pair Corralation between Western Asset and Jpmorgan Research
Assuming the 90 days horizon Western Asset is expected to generate 7.17 times less return on investment than Jpmorgan Research. But when comparing it to its historical volatility, Western Asset Diversified is 1.49 times less risky than Jpmorgan Research. It trades about 0.08 of its potential returns per unit of risk. Jpmorgan Research Equity is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 1,454 in Jpmorgan Research Equity on September 1, 2024 and sell it today you would earn a total of 51.00 from holding Jpmorgan Research Equity or generate 3.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Western Asset Diversified vs. Jpmorgan Research Equity
Performance |
| Timeline |
| Western Asset Diversified |
| Jpmorgan Research Equity |
Western Asset and Jpmorgan Research Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Jpmorgan Research
The main advantage of trading using opposite Western Asset and Jpmorgan Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Jpmorgan Research 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 Research will offset losses from the drop in Jpmorgan Research's long position.| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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