Correlation Between M Large and Jpmorgan Smartretirement*

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

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

Diversification Opportunities for M Large and Jpmorgan Smartretirement*

0.84

Correlation Coefficient

M Large  Jpmorgan Smartretirement*

Very poor diversification

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

Pair Corralation between M Large and Jpmorgan Smartretirement*

Assuming the 90 days horizon M Large Cap is expected to generate 1.82 times more return on investment than Jpmorgan Smartretirement*. However, M Large is 1.82 times more volatile than Jpmorgan Smartretirement Blend. It trades about 0.21 of its potential returns per unit of risk. Jpmorgan Smartretirement Blend is currently generating about 0.21 per unit of risk. If you would invest  3,259  in M Large Cap on September 6, 2024 and sell it today you would earn a total of  482.00  from holding M Large Cap or generate 14.79% return on investment over 90 days.

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

M Large Cap  vs.  Jpmorgan Smartretirement Blend

M Large Cap

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in M Large Cap are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, M Large showed solid returns over the last few months and may actually be approaching a breakup point.

Jpmorgan Smartretirement*

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Smartretirement Blend are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, Jpmorgan Smartretirement* may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with M Large and Jpmorgan Smartretirement*

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

The idea behind M Large Cap and Jpmorgan Smartretirement Blend 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.