Correlation Between Jpmorgan Small and High Income

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Can any of the company-specific risk be diversified away by investing in both Jpmorgan Small and High Income 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 Small and High Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jpmorgan Small Cap and High Income Fund, you can compare the effects of market volatilities on Jpmorgan Small and High Income 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 Small with a short position of High Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan Small and High Income.

Diversification Opportunities for Jpmorgan Small and High Income

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Jpmorgan and High is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding JPMORGAN SMALL CAP and HIGH INCOME FUND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Income Fund and Jpmorgan Small 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 Small Cap are associated (or correlated) with High Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Income Fund has no effect on the direction of Jpmorgan Small i.e., Jpmorgan Small and High Income go up and down completely randomly.

Pair Corralation between Jpmorgan Small and High Income

Assuming the 90 days horizon Jpmorgan Small Cap is expected to generate 3.16 times more return on investment than High Income. However, Jpmorgan Small is 3.16 times more volatile than High Income Fund. It trades about 0.17 of its potential returns per unit of risk. High Income Fund is currently generating about 0.11 per unit of risk. If you would invest  4,258  in Jpmorgan Small Cap on December 29, 2023 and sell it today you would earn a total of  117.00  from holding Jpmorgan Small Cap or generate 2.75% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.65%
ValuesDaily Returns

JPMORGAN SMALL CAP  vs.  HIGH INCOME FUND

 Performance 
       Timeline  
Jpmorgan Small Cap 

Risk-Adjusted Performance

5 of 100

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

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in High Income Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, High Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jpmorgan Small and High Income Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Jpmorgan Small and High Income

The main advantage of trading using opposite Jpmorgan Small and High Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jpmorgan Small position performs unexpectedly, High Income 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 High Income will offset losses from the drop in High Income's long position.
The idea behind Jpmorgan Small Cap and High Income Fund 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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