Correlation Between State Street and Jpmorgan Emerging
Can any of the company-specific risk be diversified away by investing in both State Street and Jpmorgan Emerging 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 State Street and Jpmorgan Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Emerging and Jpmorgan Emerging Markets, you can compare the effects of market volatilities on State Street and Jpmorgan Emerging 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 State Street with a short position of Jpmorgan Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Jpmorgan Emerging.
Diversification Opportunities for State Street and Jpmorgan Emerging
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between State and Jpmorgan is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding State Street Emerging and Jpmorgan Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Emerging Markets and State Street 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 State Street Emerging are associated (or correlated) with Jpmorgan Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Emerging Markets has no effect on the direction of State Street i.e., State Street and Jpmorgan Emerging go up and down completely randomly.
Pair Corralation between State Street and Jpmorgan Emerging
Assuming the 90 days horizon State Street Emerging is expected to generate 0.99 times more return on investment than Jpmorgan Emerging. However, State Street Emerging is 1.01 times less risky than Jpmorgan Emerging. It trades about -0.06 of its potential returns per unit of risk. Jpmorgan Emerging Markets is currently generating about -0.12 per unit of risk. If you would invest 6,280 in State Street Emerging on January 25, 2024 and sell it today you would lose (65.00) from holding State Street Emerging or give up 1.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Emerging vs. Jpmorgan Emerging Markets
Performance |
| Timeline |
| State Street Emerging |
| Jpmorgan Emerging Markets |
State Street and Jpmorgan Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Jpmorgan Emerging
The main advantage of trading using opposite State Street and Jpmorgan Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Jpmorgan Emerging 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 Emerging will offset losses from the drop in Jpmorgan Emerging's long position.| State Street vs. Amana Income Fund | State Street vs. Amana Growth Fund | State Street vs. Amana Participation Fund | State Street vs. HUMANA INC |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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