Correlation Between JPMorgan Nasdaq and Fidelity Yield

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

By analyzing existing cross correlation between JPMorgan Nasdaq Equity and Fidelity Yield Enhanced, you can compare the effects of market volatilities on JPMorgan Nasdaq and Fidelity Yield 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 Nasdaq with a short position of Fidelity Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Nasdaq and Fidelity Yield.

Diversification Opportunities for JPMorgan Nasdaq and Fidelity Yield

0.99

Correlation Coefficient

JPMorgan Nasdaq  Fidelity Yield

No risk reduction

The 3 months correlation between JPMorgan and Fidelity is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Nasdaq Equity and Fidelity Yield Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Yield Enhanced and JPMorgan Nasdaq 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 Nasdaq Equity are associated (or correlated) with Fidelity Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Yield Enhanced has no effect on the direction of JPMorgan Nasdaq i.e., JPMorgan Nasdaq and Fidelity Yield go up and down completely randomly.

Pair Corralation between JPMorgan Nasdaq and Fidelity Yield

Given the investment horizon of 90 days JPMorgan Nasdaq Equity is expected to generate 1.23 times more return on investment than Fidelity Yield. However, JPMorgan Nasdaq is 1.23 times more volatile than Fidelity Yield Enhanced. It trades about 0.24 of its potential returns per unit of risk. Fidelity Yield Enhanced is currently generating about 0.26 per unit of risk. If you would invest  5,142  in JPMorgan Nasdaq Equity on September 3, 2024 and sell it today you would earn a total of  567.00  from holding JPMorgan Nasdaq Equity or generate 11.03% return on investment over 90 days.

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

JPMorgan Nasdaq Equity  vs.  Fidelity Yield Enhanced

JPMorgan Nasdaq Equity

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Nasdaq Equity are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, JPMorgan Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fidelity Yield Enhanced

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Yield Enhanced are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Fidelity Yield may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with JPMorgan Nasdaq and Fidelity Yield

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

The idea behind JPMorgan Nasdaq Equity and Fidelity Yield Enhanced 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.