Correlation Between Jpmorgan Equity and Johnson Equity

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

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

Diversification Opportunities for Jpmorgan Equity and Johnson Equity

0.87

Correlation Coefficient

Jpmorgan Equity  Johnson Equity

Very poor diversification

The 3 months correlation between Jpmorgan and Johnson is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Equity Fund and Johnson Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Equity Income and Jpmorgan Equity 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 Equity Fund are associated (or correlated) with Johnson Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Equity Income has no effect on the direction of Jpmorgan Equity i.e., Jpmorgan Equity and Johnson Equity go up and down completely randomly.

Pair Corralation between Jpmorgan Equity and Johnson Equity

Assuming the 90 days horizon Jpmorgan Equity is expected to generate 1.15 times less return on investment than Johnson Equity. In addition to that, Jpmorgan Equity is 1.81 times more volatile than Johnson Equity Income. It trades about 0.03 of its total potential returns per unit of risk. Johnson Equity Income is currently generating about 0.06 per unit of volatility. If you would invest  3,840  in Johnson Equity Income on September 14, 2024 and sell it today you would earn a total of  90.00  from holding Johnson Equity Income or generate 2.34% return on investment over 90 days.

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

Jpmorgan Equity Fund  vs.  Johnson Equity Income

Jpmorgan Equity

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Equity Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Jpmorgan Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Johnson Equity Income

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Equity Income are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Johnson Equity 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 Equity and Johnson Equity

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

The idea behind Jpmorgan Equity Fund and Johnson Equity Income 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.