Correlation Between Jpmorgan Hedged and Persimmon Longshort

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

By analyzing existing cross correlation between Jpmorgan Hedged Equity and Persimmon Longshort Fund, you can compare the effects of market volatilities on Jpmorgan Hedged and Persimmon Longshort 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 Hedged with a short position of Persimmon Longshort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan Hedged and Persimmon Longshort.

Diversification Opportunities for Jpmorgan Hedged and Persimmon Longshort

0.97

Correlation Coefficient

Jpmorgan Hedged  Persimmon Longshort

Almost no diversification

The 3 months correlation between Jpmorgan and Persimmon is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Hedged Equity and Persimmon Longshort Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Persimmon Longshort and Jpmorgan Hedged 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 Hedged Equity are associated (or correlated) with Persimmon Longshort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Persimmon Longshort has no effect on the direction of Jpmorgan Hedged i.e., Jpmorgan Hedged and Persimmon Longshort go up and down completely randomly.

Pair Corralation between Jpmorgan Hedged and Persimmon Longshort

Assuming the 90 days horizon Jpmorgan Hedged is expected to generate 1.09 times less return on investment than Persimmon Longshort. But when comparing it to its historical volatility, Jpmorgan Hedged Equity is 1.37 times less risky than Persimmon Longshort. It trades about 0.19 of its potential returns per unit of risk. Persimmon Longshort Fund is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,511  in Persimmon Longshort Fund on September 12, 2024 and sell it today you would earn a total of  85.00  from holding Persimmon Longshort Fund or generate 5.63% return on investment over 90 days.

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

Jpmorgan Hedged Equity  vs.  Persimmon Longshort Fund

Jpmorgan Hedged Equity

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Hedged Equity are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Jpmorgan Hedged is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Persimmon Longshort

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Persimmon Longshort Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Persimmon Longshort is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jpmorgan Hedged and Persimmon Longshort

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

The idea behind Jpmorgan Hedged Equity and Persimmon Longshort Fund 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.