Correlation Between Thermo Fisher and JPMorgan Diversified

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

By analyzing existing cross correlation between Thermo Fisher Scientific and JPMorgan Diversified Return, you can compare the effects of market volatilities on Thermo Fisher and JPMorgan Diversified 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 Thermo Fisher with a short position of JPMorgan Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thermo Fisher and JPMorgan Diversified.

Diversification Opportunities for Thermo Fisher and JPMorgan Diversified

0.8

Correlation Coefficient

Thermo Fisher  JPMorgan Diversified

Very poor diversification

The 3 months correlation between Thermo and JPMorgan is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Thermo Fisher Scientific and JPMorgan Diversified Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Diversified and Thermo Fisher 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 Thermo Fisher Scientific are associated (or correlated) with JPMorgan Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Diversified has no effect on the direction of Thermo Fisher i.e., Thermo Fisher and JPMorgan Diversified go up and down completely randomly.

Pair Corralation between Thermo Fisher and JPMorgan Diversified

Considering the 90-day investment horizon Thermo Fisher Scientific is expected to generate 2.18 times more return on investment than JPMorgan Diversified. However, Thermo Fisher is 2.18 times more volatile than JPMorgan Diversified Return. It trades about 0.05 of its potential returns per unit of risk. JPMorgan Diversified Return is currently generating about -0.1 per unit of risk. If you would invest  56,882  in Thermo Fisher Scientific on January 26, 2024 and sell it today you would earn a total of  857.00  from holding Thermo Fisher Scientific or generate 1.51% return on investment over 90 days.

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

Thermo Fisher Scientific  vs.  JPMorgan Diversified Return

Thermo Fisher Scientific

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Thermo Fisher Scientific are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Thermo Fisher is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

JPMorgan Diversified

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Diversified Return are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, JPMorgan Diversified is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Thermo Fisher and JPMorgan Diversified

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

The idea behind Thermo Fisher Scientific and JPMorgan Diversified Return 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.