Correlation Between Jpmorgan Value and Jpmorgan Equity

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

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

Diversification Opportunities for Jpmorgan Value and Jpmorgan Equity

0.98

Correlation Coefficient

Jpmorgan Value  Jpmorgan Equity

Almost no diversification

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

Pair Corralation between Jpmorgan Value and Jpmorgan Equity

Assuming the 90 days horizon Jpmorgan Value Advantage is expected to under-perform the Jpmorgan Equity. In addition to that, Jpmorgan Value is 1.27 times more volatile than Jpmorgan Equity Income. It trades about -0.05 of its total potential returns per unit of risk. Jpmorgan Equity Income is currently generating about -0.05 per unit of volatility. If you would invest  2,562  in Jpmorgan Equity Income on September 17, 2024 and sell it today you would lose (86.00) from holding Jpmorgan Equity Income or give up 3.36% of portfolio value over 90 days.

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

Jpmorgan Value Advantage  vs.  Jpmorgan Equity Income

Jpmorgan Value Advantage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jpmorgan Value Advantage has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Jpmorgan Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jpmorgan Equity Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jpmorgan Equity Income has generated negative risk-adjusted returns adding no value to fund investors. 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.

Pair Trading with Jpmorgan Value and Jpmorgan Equity

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

The idea behind Jpmorgan Value Advantage and Jpmorgan 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.