Correlation Between JPMorgan BetaBuilders and KPOP

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

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

Diversification Opportunities for JPMorgan BetaBuilders and KPOP

0.74

Correlation Coefficient

JPMorgan BetaBuilders  KPOP

Poor diversification

The 3 months correlation between JPMorgan and KPOP is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan BetaBuilders Canada and KPOP and Korean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KPOP and Korean and JPMorgan BetaBuilders 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 BetaBuilders Canada are associated (or correlated) with KPOP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KPOP and Korean has no effect on the direction of JPMorgan BetaBuilders i.e., JPMorgan BetaBuilders and KPOP go up and down completely randomly.

Pair Corralation between JPMorgan BetaBuilders and KPOP

Given the investment horizon of 90 days JPMorgan BetaBuilders is expected to generate 2.27 times less return on investment than KPOP. But when comparing it to its historical volatility, JPMorgan BetaBuilders Canada is 2.89 times less risky than KPOP. It trades about 0.21 of its potential returns per unit of risk. KPOP and Korean is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,240  in KPOP and Korean on September 2, 2024 and sell it today you would earn a total of  250.00  from holding KPOP and Korean or generate 20.16% return on investment over 90 days.

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

JPMorgan BetaBuilders Canada  vs.  KPOP and Korean

JPMorgan BetaBuilders

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan BetaBuilders Canada are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, JPMorgan BetaBuilders may actually be approaching a critical reversion point that can send shares even higher in January 2025.

KPOP and Korean

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KPOP and Korean are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, KPOP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JPMorgan BetaBuilders and KPOP

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

The idea behind JPMorgan BetaBuilders Canada and KPOP and Korean 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.