Correlation Between Catalyst Enhanced and Jpmorgan Emerging

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

By analyzing existing cross correlation between Catalyst Enhanced Income and Jpmorgan Emerging Markets, you can compare the effects of market volatilities on Catalyst Enhanced and Jpmorgan Emerging 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 Catalyst Enhanced with a short position of Jpmorgan Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Enhanced and Jpmorgan Emerging.

Diversification Opportunities for Catalyst Enhanced and Jpmorgan Emerging

0.17

Correlation Coefficient

Catalyst Enhanced  Jpmorgan Emerging

Average diversification

The 3 months correlation between Catalyst and Jpmorgan is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Enhanced Income and Jpmorgan Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Emerging Markets and Catalyst Enhanced 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 Catalyst Enhanced Income are associated (or correlated) with Jpmorgan Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Emerging Markets has no effect on the direction of Catalyst Enhanced i.e., Catalyst Enhanced and Jpmorgan Emerging go up and down completely randomly.

Pair Corralation between Catalyst Enhanced and Jpmorgan Emerging

Assuming the 90 days horizon Catalyst Enhanced is expected to generate 12.69 times less return on investment than Jpmorgan Emerging. But when comparing it to its historical volatility, Catalyst Enhanced Income is 4.07 times less risky than Jpmorgan Emerging. It trades about 0.02 of its potential returns per unit of risk. Jpmorgan Emerging Markets is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,748  in Jpmorgan Emerging Markets on September 8, 2024 and sell it today you would earn a total of  266.00  from holding Jpmorgan Emerging Markets or generate 9.68% return on investment over 90 days.

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

Catalyst Enhanced Income  vs.  Jpmorgan Emerging Markets

Catalyst Enhanced Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catalyst Enhanced Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Catalyst Enhanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jpmorgan Emerging Markets

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Emerging Markets are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking indicators, Jpmorgan Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Catalyst Enhanced and Jpmorgan Emerging

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

The idea behind Catalyst Enhanced Income and Jpmorgan Emerging Markets 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.