Correlation Between SPDR SPASX and JPMorgan 100Q

Can any of the company-specific risk be diversified away by investing in both SPDR SPASX and JPMorgan 100Q 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 SPDR SPASX and JPMorgan 100Q into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SPDR SPASX 200 and JPMorgan 100Q Equity, you can compare the effects of market volatilities on SPDR SPASX and JPMorgan 100Q 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 SPDR SPASX with a short position of JPMorgan 100Q. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SPASX and JPMorgan 100Q.

Diversification Opportunities for SPDR SPASX and JPMorgan 100Q

0.79

Correlation Coefficient

SPDR SPASX  JPMorgan 100Q

Poor diversification

The 3 months correlation between SPDR and JPMorgan is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SPASX 200 and JPMorgan 100Q Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan 100Q Equity and SPDR SPASX 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 SPDR SPASX 200 are associated (or correlated) with JPMorgan 100Q. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan 100Q Equity has no effect on the direction of SPDR SPASX i.e., SPDR SPASX and JPMorgan 100Q go up and down completely randomly.

Pair Corralation between SPDR SPASX and JPMorgan 100Q

Assuming the 90 days trading horizon SPDR SPASX is expected to generate 5.66 times less return on investment than JPMorgan 100Q. But when comparing it to its historical volatility, SPDR SPASX 200 is 1.32 times less risky than JPMorgan 100Q. It trades about 0.07 of its potential returns per unit of risk. JPMorgan 100Q Equity is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  5,567  in JPMorgan 100Q Equity on September 13, 2024 and sell it today you would earn a total of  875.00  from holding JPMorgan 100Q Equity or generate 15.72% return on investment over 90 days.

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

SPDR SPASX 200  vs.  JPMorgan 100Q Equity

SPDR SPASX 200

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SPASX 200 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SPDR SPASX is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

JPMorgan 100Q Equity

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan 100Q Equity are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, JPMorgan 100Q unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPDR SPASX and JPMorgan 100Q

The main advantage of trading using opposite SPDR SPASX and JPMorgan 100Q positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SPASX position performs unexpectedly, JPMorgan 100Q 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 100Q will offset losses from the drop in JPMorgan 100Q's long position.

The idea behind SPDR SPASX 200 and JPMorgan 100Q Equity 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.