Correlation Between Jpmorgan Emerging and Putman Absolute

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

By analyzing existing cross correlation between Jpmorgan Emerging Markets and Putman Absolute Return, you can compare the effects of market volatilities on Jpmorgan Emerging and Putman Absolute 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 Emerging with a short position of Putman Absolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan Emerging and Putman Absolute.

Diversification Opportunities for Jpmorgan Emerging and Putman Absolute

0.06

Correlation Coefficient

Jpmorgan Emerging  Putman Absolute

Significant diversification

The 3 months correlation between JPMORGAN and Putman is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Emerging Markets and Putman Absolute Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putman Absolute Return and Jpmorgan Emerging 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 Emerging Markets are associated (or correlated) with Putman Absolute. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putman Absolute Return has no effect on the direction of Jpmorgan Emerging i.e., Jpmorgan Emerging and Putman Absolute go up and down completely randomly.

Pair Corralation between Jpmorgan Emerging and Putman Absolute

Assuming the 90 days horizon Jpmorgan Emerging Markets is expected to generate 2.89 times more return on investment than Putman Absolute. However, Jpmorgan Emerging is 2.89 times more volatile than Putman Absolute Return. It trades about 0.02 of its potential returns per unit of risk. Putman Absolute Return is currently generating about -0.07 per unit of risk. If you would invest  2,924  in Jpmorgan Emerging Markets on September 4, 2024 and sell it today you would earn a total of  24.00  from holding Jpmorgan Emerging Markets or generate 0.82% return on investment over 90 days.

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

Jpmorgan Emerging Markets  vs.  Putman Absolute Return

Jpmorgan Emerging Markets

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Emerging Markets are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking indicators, Jpmorgan Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Putman Absolute Return

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putman Absolute Return has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Putman Absolute 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 Emerging and Putman Absolute

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

The idea behind Jpmorgan Emerging Markets and Putman Absolute Return 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 Global Correlations module to find global opportunities by holding instruments from different markets.