Correlation Between Jpmorgan High and Conestoga Small

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

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

Diversification Opportunities for Jpmorgan High and Conestoga Small

0.58

Correlation Coefficient

Jpmorgan High  Conestoga Small

Very weak diversification

The 3 months correlation between Jpmorgan and Conestoga is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan High Yield and Conestoga Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conestoga Small Cap and Jpmorgan High 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 High Yield are associated (or correlated) with Conestoga Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conestoga Small Cap has no effect on the direction of Jpmorgan High i.e., Jpmorgan High and Conestoga Small go up and down completely randomly.

Pair Corralation between Jpmorgan High and Conestoga Small

Assuming the 90 days horizon Jpmorgan High is expected to generate 2.7 times less return on investment than Conestoga Small. But when comparing it to its historical volatility, Jpmorgan High Yield is 7.74 times less risky than Conestoga Small. It trades about 0.31 of its potential returns per unit of risk. Conestoga Small Cap is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  6,962  in Conestoga Small Cap on September 14, 2024 and sell it today you would earn a total of  1,228  from holding Conestoga Small Cap or generate 17.64% return on investment over 90 days.

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

Jpmorgan High Yield  vs.  Conestoga Small Cap

Jpmorgan High Yield

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan High Yield are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Jpmorgan High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Conestoga Small Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Conestoga 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, Conestoga Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Jpmorgan High and Conestoga Small

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

The idea behind Jpmorgan High Yield and Conestoga 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.