Correlation Between JPMorgan Fundamental and BlackRock Long

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

By analyzing existing cross correlation between JPMorgan Fundamental Data and BlackRock Long Term Equity, you can compare the effects of market volatilities on JPMorgan Fundamental and BlackRock Long 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 Fundamental with a short position of BlackRock Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Fundamental and BlackRock Long.

Diversification Opportunities for JPMorgan Fundamental and BlackRock Long

0.84

Correlation Coefficient

JPMorgan Fundamental  BlackRock Long

Very poor diversification

The 3 months correlation between JPMorgan and BlackRock is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Fundamental Data and BlackRock Long Term Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Long Term and JPMorgan Fundamental 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 Fundamental Data are associated (or correlated) with BlackRock Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Long Term has no effect on the direction of JPMorgan Fundamental i.e., JPMorgan Fundamental and BlackRock Long go up and down completely randomly.

Pair Corralation between JPMorgan Fundamental and BlackRock Long

Given the investment horizon of 90 days JPMorgan Fundamental Data is expected to generate 1.14 times more return on investment than BlackRock Long. However, JPMorgan Fundamental is 1.14 times more volatile than BlackRock Long Term Equity. It trades about 0.4 of its potential returns per unit of risk. BlackRock Long Term Equity is currently generating about 0.32 per unit of risk. If you would invest  5,549  in JPMorgan Fundamental Data on September 4, 2024 and sell it today you would earn a total of  445.00  from holding JPMorgan Fundamental Data or generate 8.02% return on investment over 90 days.

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

JPMorgan Fundamental Data  vs.  BlackRock Long Term Equity

JPMorgan Fundamental Data

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Fundamental Data are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, JPMorgan Fundamental may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BlackRock Long Term

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Long Term Equity are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile essential indicators, BlackRock Long may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with JPMorgan Fundamental and BlackRock Long

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

The idea behind JPMorgan Fundamental Data and BlackRock Long Term Equity 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.