Correlation Between Jpmorgan Hedged and Columbia Global

Can any of the company-specific risk be diversified away by investing in both Jpmorgan Hedged and Columbia Global 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 Columbia Global 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 Columbia Global Technology, you can compare the effects of market volatilities on Jpmorgan Hedged and Columbia Global 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 Columbia Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan Hedged and Columbia Global.

Diversification Opportunities for Jpmorgan Hedged and Columbia Global

0.98

Correlation Coefficient

Jpmorgan Hedged  Columbia Global

Almost no diversification

The 3 months correlation between Jpmorgan and Columbia is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Hedged Equity and Columbia Global Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Global Tech 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 Columbia Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Global Tech has no effect on the direction of Jpmorgan Hedged i.e., Jpmorgan Hedged and Columbia Global go up and down completely randomly.

Pair Corralation between Jpmorgan Hedged and Columbia Global

Assuming the 90 days horizon Jpmorgan Hedged is expected to generate 1.82 times less return on investment than Columbia Global. But when comparing it to its historical volatility, Jpmorgan Hedged Equity is 2.55 times less risky than Columbia Global. It trades about 0.25 of its potential returns per unit of risk. Columbia Global Technology is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  8,391  in Columbia Global Technology on September 5, 2024 and sell it today you would earn a total of  1,195  from holding Columbia Global Technology or generate 14.24% 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.  Columbia Global Technology

Jpmorgan Hedged Equity

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Hedged Equity are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Jpmorgan Hedged may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Columbia Global Tech

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Global Technology are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Columbia Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jpmorgan Hedged and Columbia Global

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

The idea behind Jpmorgan Hedged Equity and Columbia Global Technology 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.