Correlation Between JPMorgan Equity and SPTSX Equal

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

By analyzing existing cross correlation between JPMorgan Equity Premium and SPTSX Equal Weight, you can compare the effects of market volatilities on JPMorgan Equity and SPTSX Equal 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 SPTSX Equal. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Equity and SPTSX Equal.

Diversification Opportunities for JPMorgan Equity and SPTSX Equal

0.0

Correlation Coefficient

JPMorgan Equity  SPTSX Equal

Pay attention - limited upside

The 3 months correlation between JPMorgan and SPTSX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Equity Premium and SPTSX Equal Weight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPTSX Equal Weight 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 Premium are associated (or correlated) with SPTSX Equal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPTSX Equal Weight has no effect on the direction of JPMorgan Equity i.e., JPMorgan Equity and SPTSX Equal go up and down completely randomly.

Pair Corralation between JPMorgan Equity and SPTSX Equal

If you would invest (100.00) in SPTSX Equal Weight on January 27, 2024 and sell it today you would earn a total of  100.00  from holding SPTSX Equal Weight or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

JPMorgan Equity Premium  vs.  SPTSX Equal Weight

Pair Trading with JPMorgan Equity and SPTSX Equal

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

The idea behind JPMorgan Equity Premium and SPTSX Equal Weight 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.