Correlation Between Jpmorgan Large and Amg River

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

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

Diversification Opportunities for Jpmorgan Large and Amg River

0.92

Correlation Coefficient

Jpmorgan Large  Amg River

Almost no diversification

The 3 months correlation between Jpmorgan and Amg is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Large Cap and Amg River Road in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg River Road and Jpmorgan Large 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 Large Cap are associated (or correlated) with Amg River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg River Road has no effect on the direction of Jpmorgan Large i.e., Jpmorgan Large and Amg River go up and down completely randomly.

Pair Corralation between Jpmorgan Large and Amg River

Assuming the 90 days horizon Jpmorgan Large is expected to generate 1.79 times less return on investment than Amg River. But when comparing it to its historical volatility, Jpmorgan Large Cap is 1.49 times less risky than Amg River. It trades about 0.19 of its potential returns per unit of risk. Amg River Road is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,571  in Amg River Road on September 12, 2024 and sell it today you would earn a total of  251.00  from holding Amg River Road or generate 15.98% return on investment over 90 days.

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

Jpmorgan Large Cap  vs.  Amg River Road

Jpmorgan Large Cap

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Large Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Jpmorgan Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Amg River Road

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amg River Road are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Amg River showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jpmorgan Large and Amg River

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

The idea behind Jpmorgan Large Cap and Amg River Road 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.