Correlation Between Jpmorgan Equity and Westrock Coffee

Can any of the company-specific risk be diversified away by investing in both Jpmorgan Equity and Westrock Coffee 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 Equity and Westrock Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jpmorgan Equity Index and Westrock Coffee, you can compare the effects of market volatilities on Jpmorgan Equity and Westrock Coffee 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 Equity with a short position of Westrock Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan Equity and Westrock Coffee.

Diversification Opportunities for Jpmorgan Equity and Westrock Coffee

0.06

Correlation Coefficient

Jpmorgan Equity  Westrock Coffee

Significant diversification

The 3 months correlation between JPMORGAN and Westrock is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Equity Index and Westrock Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westrock Coffee and Jpmorgan Equity 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 Equity Index are associated (or correlated) with Westrock Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westrock Coffee has no effect on the direction of Jpmorgan Equity i.e., Jpmorgan Equity and Westrock Coffee go up and down completely randomly.

Pair Corralation between Jpmorgan Equity and Westrock Coffee

Assuming the 90 days horizon Jpmorgan Equity is expected to generate 4.39 times less return on investment than Westrock Coffee. But when comparing it to its historical volatility, Jpmorgan Equity Index is 5.13 times less risky than Westrock Coffee. It trades about 0.06 of its potential returns per unit of risk. Westrock Coffee is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  140.00  in Westrock Coffee on February 28, 2024 and sell it today you would earn a total of  100.00  from holding Westrock Coffee or generate 71.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	86.26%
Values	Daily Returns

Jpmorgan Equity Index  vs.  Westrock Coffee

Jpmorgan Equity Index

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Equity Index are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Jpmorgan Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Westrock Coffee

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Westrock Coffee are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Westrock Coffee showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jpmorgan Equity and Westrock Coffee

The main advantage of trading using opposite Jpmorgan Equity and Westrock Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jpmorgan Equity position performs unexpectedly, Westrock Coffee 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 Westrock Coffee will offset losses from the drop in Westrock Coffee's long position.

The idea behind Jpmorgan Equity Index and Westrock Coffee 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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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.