Correlation Between American Mutual and Jpmorgan Equity
Can any of the company-specific risk be diversified away by investing in both American Mutual 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 American Mutual and Jpmorgan Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Mutual Fund and Jpmorgan Equity Income, you can compare the effects of market volatilities on American Mutual 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 American Mutual with a short position of Jpmorgan Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Jpmorgan Equity.
Diversification Opportunities for American Mutual and Jpmorgan Equity
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Jpmorgan is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Jpmorgan Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Equity Me and American Mutual 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 American Mutual Fund 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 Me has no effect on the direction of American Mutual i.e., American Mutual and Jpmorgan Equity go up and down completely randomly.
Pair Corralation between American Mutual and Jpmorgan Equity
Assuming the 90 days horizon American Mutual Fund is expected to under-perform the Jpmorgan Equity. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Mutual Fund is 1.06 times less risky than Jpmorgan Equity. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Jpmorgan Equity Income is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 2,303 in Jpmorgan Equity Income on January 26, 2024 and sell it today you would lose (7.00) from holding Jpmorgan Equity Income or give up 0.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Mutual Fund vs. Jpmorgan Equity Income
Performance |
| Timeline |
| American Mutual |
| Jpmorgan Equity Me |
American Mutual and Jpmorgan Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Jpmorgan Equity
The main advantage of trading using opposite American Mutual and Jpmorgan Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual 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.| American Mutual vs. Income Fund Of | American Mutual vs. New World Fund | American Mutual vs. American Mutual Fund | American Mutual vs. American Mutual Fund |
| Jpmorgan Equity vs. Jpmorgan Smartretirement 2035 | Jpmorgan Equity vs. Jpmorgan Smartretirement 2035 | Jpmorgan Equity vs. Jpmorgan Smartretirement 2035 | Jpmorgan Equity vs. Jpmorgan Smartretirement 2035 |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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