Correlation Between JPMorgan and InfraCap MLP

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

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

Diversification Opportunities for JPMorgan and InfraCap MLP

0.78

Correlation Coefficient

JPMorgan  InfraCap MLP

Poor diversification

The 3 months correlation between JPMorgan and InfraCap is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan and InfraCap MLP ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InfraCap MLP ETF and JPMorgan 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 are associated (or correlated) with InfraCap MLP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InfraCap MLP ETF has no effect on the direction of JPMorgan i.e., JPMorgan and InfraCap MLP go up and down completely randomly.

Pair Corralation between JPMorgan and InfraCap MLP

If you would invest  3,990  in InfraCap MLP ETF on September 2, 2024 and sell it today you would earn a total of  741.00  from holding InfraCap MLP ETF or generate 18.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	0.0%
Values	Daily Returns

JPMorgan  vs.  InfraCap MLP ETF

JPMorgan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMorgan has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady primary indicators, JPMorgan is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

InfraCap MLP ETF

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in InfraCap MLP ETF are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, InfraCap MLP sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JPMorgan and InfraCap MLP

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

The idea behind JPMorgan and InfraCap MLP ETF 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.