Correlation Between JPMorgan Active and Global X

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

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

Diversification Opportunities for JPMorgan Active and Global X

-0.59

Correlation Coefficient

JPMorgan Active  Global X

Excellent diversification

The 3 months correlation between JPMorgan and Global is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Active Value and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds and JPMorgan Active 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 Active Value are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of JPMorgan Active i.e., JPMorgan Active and Global X go up and down completely randomly.

Pair Corralation between JPMorgan Active and Global X

Given the investment horizon of 90 days JPMorgan Active Value is expected to generate 0.82 times more return on investment than Global X. However, JPMorgan Active Value is 1.22 times less risky than Global X. It trades about 0.01 of its potential returns per unit of risk. Global X Funds is currently generating about -0.04 per unit of risk. If you would invest  6,352  in JPMorgan Active Value on September 23, 2024 and sell it today you would earn a total of  27.00  from holding JPMorgan Active Value or generate 0.43% return on investment over 90 days.

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

JPMorgan Active Value  vs.  Global X Funds

JPMorgan Active Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMorgan Active Value has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, JPMorgan Active is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with JPMorgan Active and Global X

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

The idea behind JPMorgan Active Value and Global X Funds 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.