Correlation Between Jpmorgan Short and Jpmorgan Value

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

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

Diversification Opportunities for Jpmorgan Short and Jpmorgan Value

-0.5

Correlation Coefficient

Jpmorgan Short  Jpmorgan Value

Very good diversification

The 3 months correlation between Jpmorgan and Jpmorgan is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Short Duration and Jpmorgan Value Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Value Advantage and Jpmorgan Short 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 Short Duration are associated (or correlated) with Jpmorgan Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Value Advantage has no effect on the direction of Jpmorgan Short i.e., Jpmorgan Short and Jpmorgan Value go up and down completely randomly.

Pair Corralation between Jpmorgan Short and Jpmorgan Value

Assuming the 90 days horizon Jpmorgan Short Duration is expected to generate 0.08 times more return on investment than Jpmorgan Value. However, Jpmorgan Short Duration is 12.72 times less risky than Jpmorgan Value. It trades about -0.07 of its potential returns per unit of risk. Jpmorgan Value Advantage is currently generating about -0.05 per unit of risk. If you would invest  1,094  in Jpmorgan Short Duration on September 17, 2024 and sell it today you would lose (5.00) from holding Jpmorgan Short Duration or give up 0.46% of portfolio value over 90 days.

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

Jpmorgan Short Duration  vs.  Jpmorgan Value Advantage

Jpmorgan Short Duration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jpmorgan Short Duration has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Jpmorgan Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jpmorgan Value Advantage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jpmorgan Value Advantage has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Jpmorgan Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jpmorgan Short and Jpmorgan Value

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

The idea behind Jpmorgan Short Duration and Jpmorgan Value Advantage 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.