Correlation Between Jpmorgan Small and Us Small

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

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

Diversification Opportunities for Jpmorgan Small and Us Small

0.99

Correlation Coefficient

Jpmorgan Small  Us Small

No risk reduction

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

Pair Corralation between Jpmorgan Small and Us Small

Assuming the 90 days horizon Jpmorgan Small Cap is expected to generate 0.96 times more return on investment than Us Small. However, Jpmorgan Small Cap is 1.04 times less risky than Us Small. It trades about 0.17 of its potential returns per unit of risk. Us Small Cap is currently generating about 0.16 per unit of risk. If you would invest  2,104  in Jpmorgan Small Cap on August 31, 2024 and sell it today you would earn a total of  273.00  from holding Jpmorgan Small Cap or generate 12.98% return on investment over 90 days.

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

Jpmorgan Small Cap  vs.  Us Small Cap

Jpmorgan Small Cap

Risk-Adjusted Performance

13 of 100

Good

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

Us Small Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Us Small Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Us Small may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Jpmorgan Small and Us Small

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

The idea behind Jpmorgan Small Cap and Us Small Cap 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.