Correlation Between Horizon Active and JPMorgan Chase

Can any of the company-specific risk be diversified away by investing in both Horizon Active and JPMorgan Chase 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 Horizon Active and JPMorgan Chase into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Horizon Active Asset and JPMorgan Chase Co, you can compare the effects of market volatilities on Horizon Active and JPMorgan Chase 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 Horizon Active with a short position of JPMorgan Chase. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Active and JPMorgan Chase.

Diversification Opportunities for Horizon Active and JPMorgan Chase

0.94

Correlation Coefficient

Horizon Active  JPMorgan Chase

Almost no diversification

The 3 months correlation between Horizon and JPMorgan is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Active Asset and JPMorgan Chase Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Chase and Horizon Active 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 Horizon Active Asset are associated (or correlated) with JPMorgan Chase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Chase has no effect on the direction of Horizon Active i.e., Horizon Active and JPMorgan Chase go up and down completely randomly.

Pair Corralation between Horizon Active and JPMorgan Chase

Assuming the 90 days horizon Horizon Active Asset is expected to under-perform the JPMorgan Chase. But the mutual fund apears to be less risky and, when comparing its historical volatility, Horizon Active Asset is 2.35 times less risky than JPMorgan Chase. The mutual fund trades about -0.18 of its potential returns per unit of risk. The JPMorgan Chase Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  19,369  in JPMorgan Chase Co on January 25, 2024 and sell it today you would lose (113.00) from holding JPMorgan Chase Co or give up 0.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Horizon Active Asset  vs.  JPMorgan Chase Co

Horizon Active Asset

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Active Asset are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Horizon Active is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

JPMorgan Chase

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, JPMorgan Chase may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Horizon Active and JPMorgan Chase

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

The idea behind Horizon Active Asset and JPMorgan Chase Co 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.

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.