Correlation Between JPMorgan Inflation and JPMorgan Market

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

By analyzing existing cross correlation between JPMorgan Inflation Managed and JPMorgan Market Expansion, you can compare the effects of market volatilities on JPMorgan Inflation and JPMorgan Market 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 Inflation with a short position of JPMorgan Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Inflation and JPMorgan Market.

Diversification Opportunities for JPMorgan Inflation and JPMorgan Market

-0.31

Correlation Coefficient

JPMorgan Inflation  JPMorgan Market

Very good diversification

The 3 months correlation between JPMorgan and JPMorgan is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Inflation Managed and JPMorgan Market Expansion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Market Expansion and JPMorgan Inflation 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 Inflation Managed are associated (or correlated) with JPMorgan Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Market Expansion has no effect on the direction of JPMorgan Inflation i.e., JPMorgan Inflation and JPMorgan Market go up and down completely randomly.

Pair Corralation between JPMorgan Inflation and JPMorgan Market

Given the investment horizon of 90 days JPMorgan Inflation Managed is expected to under-perform the JPMorgan Market. But the etf apears to be less risky and, when comparing its historical volatility, JPMorgan Inflation Managed is 4.42 times less risky than JPMorgan Market. The etf trades about -0.12 of its potential returns per unit of risk. The JPMorgan Market Expansion is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  6,056  in JPMorgan Market Expansion on September 20, 2024 and sell it today you would earn a total of  34.00  from holding JPMorgan Market Expansion or generate 0.56% return on investment over 90 days.

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

JPMorgan Inflation Managed  vs.  JPMorgan Market Expansion

JPMorgan Inflation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMorgan Inflation Managed has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, JPMorgan Inflation is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

JPMorgan Market Expansion

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Market Expansion are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, JPMorgan Market is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with JPMorgan Inflation and JPMorgan Market

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

The idea behind JPMorgan Inflation Managed and JPMorgan Market Expansion 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.