Correlation Between Absolute Convertible and Jpmorgan Intrepid

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

By analyzing existing cross correlation between Absolute Convertible Arbitrage and Jpmorgan Intrepid Mid, you can compare the effects of market volatilities on Absolute Convertible and Jpmorgan Intrepid 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 Absolute Convertible with a short position of Jpmorgan Intrepid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Jpmorgan Intrepid.

Diversification Opportunities for Absolute Convertible and Jpmorgan Intrepid

0.88

Correlation Coefficient

Absolute Convertible  Jpmorgan Intrepid

Very poor diversification

The 3 months correlation between Absolute and Jpmorgan is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Jpmorgan Intrepid Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Intrepid Mid and Absolute Convertible 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 Absolute Convertible Arbitrage are associated (or correlated) with Jpmorgan Intrepid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Intrepid Mid has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Jpmorgan Intrepid go up and down completely randomly.

Pair Corralation between Absolute Convertible and Jpmorgan Intrepid

Assuming the 90 days horizon Absolute Convertible is expected to generate 5.24 times less return on investment than Jpmorgan Intrepid. But when comparing it to its historical volatility, Absolute Convertible Arbitrage is 17.61 times less risky than Jpmorgan Intrepid. It trades about 0.51 of its potential returns per unit of risk. Jpmorgan Intrepid Mid is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,627  in Jpmorgan Intrepid Mid on September 12, 2024 and sell it today you would earn a total of  146.00  from holding Jpmorgan Intrepid Mid or generate 8.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Absolute Convertible Arbitrage  vs.  Jpmorgan Intrepid Mid

Absolute Convertible

Risk-Adjusted Performance

40 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Absolute Convertible Arbitrage are ranked lower than 40 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Absolute Convertible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jpmorgan Intrepid Mid

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Intrepid Mid are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Jpmorgan Intrepid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Absolute Convertible and Jpmorgan Intrepid

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

The idea behind Absolute Convertible Arbitrage and Jpmorgan Intrepid Mid 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.