Correlation Between Jpmorgan Value and Walmart

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

Diversification Opportunities for Jpmorgan Value and Walmart

0.43
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Jpmorgan and Walmart is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Value Advantage and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Jpmorgan Value 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 Value Advantage are associated (or correlated) with Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of Jpmorgan Value i.e., Jpmorgan Value and Walmart go up and down completely randomly.

Pair Corralation between Jpmorgan Value and Walmart

Assuming the 90 days horizon Jpmorgan Value Advantage is expected to generate 0.75 times more return on investment than Walmart. However, Jpmorgan Value Advantage is 1.34 times less risky than Walmart. It trades about 0.04 of its potential returns per unit of risk. Walmart is currently generating about 0.02 per unit of risk. If you would invest  3,361  in Jpmorgan Value Advantage on May 20, 2022 and sell it today you would earn a total of  536.00  from holding Jpmorgan Value Advantage or generate 15.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy99.73%
ValuesDaily Returns

Jpmorgan Value Advantage  vs.  Walmart

 Performance (%) 
       Timeline  
Jpmorgan Value Advantage 
Jpmorgan Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Value Advantage 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 Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jpmorgan Price Channel

Walmart 
Walmart Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Walmart Price Channel

Jpmorgan Value and Walmart Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Jpmorgan Value and Walmart

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

Jpmorgan Value Advantage

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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Jpmorgan Value as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Jpmorgan Value's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Jpmorgan Value's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Jpmorgan Value Advantage.
The idea behind Jpmorgan Value Advantage and Walmart 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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