Correlation Between JP Morgan and KraneShares Trust

Can any of the company-specific risk be diversified away by investing in both JP Morgan and KraneShares 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 JP Morgan and KraneShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JP Morgan Exchange Traded and KraneShares Trust , you can compare the effects of market volatilities on JP Morgan and KraneShares 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 JP Morgan with a short position of KraneShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of JP Morgan and KraneShares Trust.

Diversification Opportunities for JP Morgan and KraneShares Trust

0.53

Correlation Coefficient

JP Morgan  KraneShares Trust

Very weak diversification

The 3 months correlation between JCHI and KraneShares is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding JP Morgan Exchange Traded and KraneShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Trust and JP Morgan 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 JP Morgan Exchange Traded are associated (or correlated) with KraneShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Trust has no effect on the direction of JP Morgan i.e., JP Morgan and KraneShares Trust go up and down completely randomly.

Pair Corralation between JP Morgan and KraneShares Trust

Given the investment horizon of 90 days JP Morgan Exchange Traded is expected to under-perform the KraneShares Trust. In addition to that, JP Morgan is 1.27 times more volatile than KraneShares Trust . It trades about -0.1 of its total potential returns per unit of risk. KraneShares Trust is currently generating about -0.01 per unit of volatility. If you would invest  1,090  in KraneShares Trust on September 5, 2024 and sell it today you would lose (6.00) from holding KraneShares Trust or give up 0.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

JP Morgan Exchange Traded  vs.  KraneShares Trust

JP Morgan Exchange

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JP Morgan Exchange Traded are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, JP Morgan demonstrated solid returns over the last few months and may actually be approaching a breakup point.

KraneShares Trust

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, KraneShares Trust is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with JP Morgan and KraneShares Trust

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

The idea behind JP Morgan Exchange Traded and KraneShares Trust 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.