Correlation Between JPMorgan and First Trust

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

By analyzing existing cross correlation between JPMorgan and First Trust Natural, you can compare the effects of market volatilities on JPMorgan and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan and First Trust.

Diversification Opportunities for JPMorgan and First Trust

-0.07

Correlation Coefficient

JPMorgan  First Trust

Good diversification

The 3 months correlation between JPMorgan and First is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan and First Trust Natural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Natural 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Natural has no effect on the direction of JPMorgan i.e., JPMorgan and First Trust go up and down completely randomly.

Pair Corralation between JPMorgan and First Trust

If you would invest  2,399  in JPMorgan on September 23, 2024 and sell it today you would earn a total of  0.00  from holding JPMorgan or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.54%
Values	Daily Returns

JPMorgan  vs.  First Trust Natural

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.

First Trust Natural

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Trust Natural has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, First Trust is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with JPMorgan and First Trust

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

The idea behind JPMorgan and First Trust Natural 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.