Correlation Between Global X and JPMorgan Diversified

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

By analyzing existing cross correlation between Global X Funds and JPMorgan Diversified Return, you can compare the effects of market volatilities on Global X and JPMorgan Diversified 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 Global X with a short position of JPMorgan Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and JPMorgan Diversified.

Diversification Opportunities for Global X and JPMorgan Diversified

0.84

Correlation Coefficient

Global X  JPMorgan Diversified

Very poor diversification

The 3 months correlation between Global and JPMorgan is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and JPMorgan Diversified Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Diversified and Global X 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 Global X Funds are associated (or correlated) with JPMorgan Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Diversified has no effect on the direction of Global X i.e., Global X and JPMorgan Diversified go up and down completely randomly.

Pair Corralation between Global X and JPMorgan Diversified

Considering the 90-day investment horizon Global X Funds is expected to generate 1.01 times more return on investment than JPMorgan Diversified. However, Global X is 1.01 times more volatile than JPMorgan Diversified Return. It trades about -0.02 of its potential returns per unit of risk. JPMorgan Diversified Return is currently generating about -0.02 per unit of risk. If you would invest  2,673  in Global X Funds on August 30, 2024 and sell it today you would lose (36.00) from holding Global X Funds or give up 1.35% of portfolio value over 90 days.

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

Global X Funds  vs.  JPMorgan Diversified Return

Global X Funds

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Funds has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Global X is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

JPMorgan Diversified

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMorgan Diversified Return has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, JPMorgan Diversified is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Global X and JPMorgan Diversified

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

The idea behind Global X Funds and JPMorgan Diversified Return 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.