Correlation Between JPMorgan BetaBuilders and First Trust

Can any of the company-specific risk be diversified away by investing in both JPMorgan BetaBuilders 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 BetaBuilders 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 BetaBuilders Mid and First Trust Mid, you can compare the effects of market volatilities on JPMorgan BetaBuilders 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 BetaBuilders with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan BetaBuilders and First Trust.

Diversification Opportunities for JPMorgan BetaBuilders and First Trust

0.99

Correlation Coefficient

JPMorgan BetaBuilders  First Trust

No risk reduction

The 3 months correlation between JPMorgan and First is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan BetaBuilders Mid and First Trust Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Mid 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 Mid 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 Mid has no effect on the direction of JPMorgan BetaBuilders i.e., JPMorgan BetaBuilders and First Trust go up and down completely randomly.

Pair Corralation between JPMorgan BetaBuilders and First Trust

Given the investment horizon of 90 days JPMorgan BetaBuilders Mid is expected to generate 0.93 times more return on investment than First Trust. However, JPMorgan BetaBuilders Mid is 1.07 times less risky than First Trust. It trades about 0.22 of its potential returns per unit of risk. First Trust Mid is currently generating about 0.16 per unit of risk. If you would invest  8,968  in JPMorgan BetaBuilders Mid on September 12, 2024 and sell it today you would earn a total of  1,207  from holding JPMorgan BetaBuilders Mid or generate 13.46% return on investment over 90 days.

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

JPMorgan BetaBuilders Mid  vs.  First Trust Mid

JPMorgan BetaBuilders Mid

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan BetaBuilders Mid are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating primary indicators, JPMorgan BetaBuilders exhibited solid returns over the last few months and may actually be approaching a breakup point.

First Trust Mid

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with JPMorgan BetaBuilders and First Trust

The main advantage of trading using opposite JPMorgan BetaBuilders and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan BetaBuilders 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 BetaBuilders Mid and First Trust 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.