Correlation Between Jpmorgan Equity and Cutler Equity

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

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

Diversification Opportunities for Jpmorgan Equity and Cutler Equity

0.91

Correlation Coefficient

Jpmorgan Equity  Cutler Equity

Almost no diversification

The 3 months correlation between JPMORGAN and Cutler is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Equity Income and Cutler Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cutler Equity and Jpmorgan Equity 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 Equity Income are associated (or correlated) with Cutler Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cutler Equity has no effect on the direction of Jpmorgan Equity i.e., Jpmorgan Equity and Cutler Equity go up and down completely randomly.

Pair Corralation between Jpmorgan Equity and Cutler Equity

Assuming the 90 days horizon Jpmorgan Equity Income is expected to generate 1.09 times more return on investment than Cutler Equity. However, Jpmorgan Equity is 1.09 times more volatile than Cutler Equity. It trades about 0.19 of its potential returns per unit of risk. Cutler Equity is currently generating about 0.2 per unit of risk. If you would invest  2,540  in Jpmorgan Equity Income on September 3, 2024 and sell it today you would earn a total of  210.00  from holding Jpmorgan Equity Income or generate 8.27% return on investment over 90 days.

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

Jpmorgan Equity Income  vs.  Cutler Equity

Jpmorgan Equity Income

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Equity Income are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Jpmorgan Equity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Cutler Equity

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cutler Equity are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly conflicting technical indicators, Cutler Equity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Jpmorgan Equity and Cutler Equity

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

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