Correlation Between Plug Power and Jpmorgan Small

Can any of the company-specific risk be diversified away by investing in both Plug Power and Jpmorgan Small 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 Plug Power and Jpmorgan Small into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Plug Power and Jpmorgan Small Cap, you can compare the effects of market volatilities on Plug Power and Jpmorgan Small 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 Plug Power with a short position of Jpmorgan Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plug Power and Jpmorgan Small.

Diversification Opportunities for Plug Power and Jpmorgan Small

-0.04

Correlation Coefficient

Plug Power  Jpmorgan Small

Good diversification

The 3 months correlation between Plug and Jpmorgan is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Plug Power and Jpmorgan Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Small Cap and Plug Power 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 Plug Power are associated (or correlated) with Jpmorgan Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Small Cap has no effect on the direction of Plug Power i.e., Plug Power and Jpmorgan Small go up and down completely randomly.

Pair Corralation between Plug Power and Jpmorgan Small

Given the investment horizon of 90 days Plug Power is expected to under-perform the Jpmorgan Small. In addition to that, Plug Power is 3.97 times more volatile than Jpmorgan Small Cap. It trades about -0.04 of its total potential returns per unit of risk. Jpmorgan Small Cap is currently generating about 0.01 per unit of volatility. If you would invest  3,656  in Jpmorgan Small Cap on January 20, 2024 and sell it today you would lose (7.00) from holding Jpmorgan Small Cap or give up 0.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Plug Power  vs.  Jpmorgan Small Cap

Plug Power

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Plug Power are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Plug Power may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Jpmorgan Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jpmorgan Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Jpmorgan Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Plug Power and Jpmorgan Small

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

The idea behind Plug Power and Jpmorgan Small Cap 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.