Correlation Between BetaShares Australia and JPMorgan Equity

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

By analyzing existing cross correlation between BetaShares Australia 200 and JPMorgan Equity Premium, you can compare the effects of market volatilities on BetaShares Australia and JPMorgan Equity 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 BetaShares Australia with a short position of JPMorgan Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Australia and JPMorgan Equity.

Diversification Opportunities for BetaShares Australia and JPMorgan Equity

0.75

Correlation Coefficient

BetaShares Australia  JPMorgan Equity

Poor diversification

The 3 months correlation between BetaShares and JPMorgan is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Australia 200 and JPMorgan Equity Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Equity Premium and BetaShares Australia 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 BetaShares Australia 200 are associated (or correlated) with JPMorgan Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Equity Premium has no effect on the direction of BetaShares Australia i.e., BetaShares Australia and JPMorgan Equity go up and down completely randomly.

Pair Corralation between BetaShares Australia and JPMorgan Equity

Assuming the 90 days trading horizon BetaShares Australia 200 is expected to generate 1.1 times more return on investment than JPMorgan Equity. However, BetaShares Australia is 1.1 times more volatile than JPMorgan Equity Premium. It trades about 0.11 of its potential returns per unit of risk. JPMorgan Equity Premium is currently generating about 0.12 per unit of risk. If you would invest  13,506  in BetaShares Australia 200 on September 12, 2024 and sell it today you would earn a total of  499.00  from holding BetaShares Australia 200 or generate 3.69% return on investment over 90 days.

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

BetaShares Australia 200  vs.  JPMorgan Equity Premium

BetaShares Australia 200

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BetaShares Australia 200 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BetaShares Australia is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

JPMorgan Equity Premium

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with BetaShares Australia and JPMorgan Equity

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

The idea behind BetaShares Australia 200 and JPMorgan Equity Premium 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.