Correlation Between Echiquier Entrepreneurs and JPM America

Can any of the company-specific risk be diversified away by investing in both Echiquier Entrepreneurs and JPM America 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 Echiquier Entrepreneurs and JPM America into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Echiquier Entrepreneurs G and JPM America Equity, you can compare the effects of market volatilities on Echiquier Entrepreneurs and JPM America 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 Echiquier Entrepreneurs with a short position of JPM America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Echiquier Entrepreneurs and JPM America.

Diversification Opportunities for Echiquier Entrepreneurs and JPM America

-0.44

Correlation Coefficient

Echiquier Entrepreneurs  JPM America

Very good diversification

The 3 months correlation between Echiquier and JPM is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Echiquier Entrepreneurs G and JPM America Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM America Equity and Echiquier Entrepreneurs 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 Echiquier Entrepreneurs G are associated (or correlated) with JPM America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM America Equity has no effect on the direction of Echiquier Entrepreneurs i.e., Echiquier Entrepreneurs and JPM America go up and down completely randomly.

Pair Corralation between Echiquier Entrepreneurs and JPM America

Assuming the 90 days trading horizon Echiquier Entrepreneurs G is expected to under-perform the JPM America. But the fund apears to be less risky and, when comparing its historical volatility, Echiquier Entrepreneurs G is 1.45 times less risky than JPM America. The fund trades about -0.01 of its potential returns per unit of risk. The JPM America Equity is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  38,178  in JPM America Equity on September 7, 2024 and sell it today you would earn a total of  6,566  from holding JPM America Equity or generate 17.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Echiquier Entrepreneurs G  vs.  JPM America Equity

Echiquier Entrepreneurs

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Echiquier Entrepreneurs G are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Echiquier Entrepreneurs is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

JPM America Equity

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JPM America Equity are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather weak technical and fundamental indicators, JPM America exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Echiquier Entrepreneurs and JPM America

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

The idea behind Echiquier Entrepreneurs G and JPM America Equity 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.