Correlation Between JPMorgan Fundamental and SPDR SP

Can any of the company-specific risk be diversified away by investing in both JPMorgan Fundamental and SPDR SP 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 SPDR SP 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 SPDR SP 600, you can compare the effects of market volatilities on JPMorgan Fundamental and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Fundamental and SPDR SP.

Diversification Opportunities for JPMorgan Fundamental and SPDR SP

0.94

Correlation Coefficient

JPMorgan Fundamental  SPDR SP

Almost no diversification

The 3 months correlation between JPMorgan and SPDR is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Fundamental Data and SPDR SP 600 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 600 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP 600 has no effect on the direction of JPMorgan Fundamental i.e., JPMorgan Fundamental and SPDR SP go up and down completely randomly.

Pair Corralation between JPMorgan Fundamental and SPDR SP

Given the investment horizon of 90 days JPMorgan Fundamental is expected to generate 1.48 times less return on investment than SPDR SP. But when comparing it to its historical volatility, JPMorgan Fundamental Data is 1.78 times less risky than SPDR SP. It trades about 0.03 of its potential returns per unit of risk. SPDR SP 600 is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  8,629  in SPDR SP 600 on September 21, 2024 and sell it today you would earn a total of  111.00  from holding SPDR SP 600 or generate 1.29% return on investment over 90 days.

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

JPMorgan Fundamental Data  vs.  SPDR SP 600

JPMorgan Fundamental Data

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Fundamental Data are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, JPMorgan Fundamental is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

SPDR SP 600

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP 600 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, SPDR SP is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with JPMorgan Fundamental and SPDR SP

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

The idea behind JPMorgan Fundamental Data and SPDR SP 600 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.