Correlation Between Jpmorgan International and International Advantage
Can any of the company-specific risk be diversified away by investing in both Jpmorgan International and International Advantage 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 International and International Advantage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jpmorgan International Unconstrained and International Advantage Portfolio, you can compare the effects of market volatilities on Jpmorgan International and International Advantage 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 International with a short position of International Advantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan International and International Advantage.
Diversification Opportunities for Jpmorgan International and International Advantage
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jpmorgan and International is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan International Unconst and International Advantage Portfo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Advantage and Jpmorgan International 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 International Unconstrained are associated (or correlated) with International Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Advantage has no effect on the direction of Jpmorgan International i.e., Jpmorgan International and International Advantage go up and down completely randomly.
Pair Corralation between Jpmorgan International and International Advantage
Assuming the 90 days horizon Jpmorgan International Unconstrained is expected to generate 0.7 times more return on investment than International Advantage. However, Jpmorgan International Unconstrained is 1.42 times less risky than International Advantage. It trades about 0.05 of its potential returns per unit of risk. International Advantage Portfolio is currently generating about 0.01 per unit of risk. If you would invest 2,282 in Jpmorgan International Unconstrained on January 25, 2024 and sell it today you would earn a total of 206.00 from holding Jpmorgan International Unconstrained or generate 9.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jpmorgan International Unconst vs. International Advantage Portfo
Performance |
| Timeline |
| Jpmorgan International |
| International Advantage |
Jpmorgan International and International Advantage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jpmorgan International and International Advantage
The main advantage of trading using opposite Jpmorgan International and International Advantage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jpmorgan International position performs unexpectedly, International Advantage 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 International Advantage will offset losses from the drop in International Advantage's long position.The idea behind Jpmorgan International Unconstrained and International Advantage Portfolio 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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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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