Correlation Between Commodityrealreturn and Jpmorgan

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

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

Diversification Opportunities for Commodityrealreturn and Jpmorgan

0.32

Correlation Coefficient

Commodityrealreturn  Jpmorgan

Weak diversification

The 3 months correlation between Commodityrealreturn and Jpmorgan is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Commodityrealreturn Strategy F and Jpmorgan Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Large Cap and Commodityrealreturn 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 Commodityrealreturn Strategy Fund are associated (or correlated) with Jpmorgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Large Cap has no effect on the direction of Commodityrealreturn i.e., Commodityrealreturn and Jpmorgan go up and down completely randomly.

Pair Corralation between Commodityrealreturn and Jpmorgan

Assuming the 90 days horizon Commodityrealreturn Strategy Fund is expected to generate 10.27 times more return on investment than Jpmorgan. However, Commodityrealreturn is 10.27 times more volatile than Jpmorgan Large Cap. It trades about 0.03 of its potential returns per unit of risk. Jpmorgan Large Cap is currently generating about 0.09 per unit of risk. If you would invest  1,124  in Commodityrealreturn Strategy Fund on September 4, 2024 and sell it today you would earn a total of  124.00  from holding Commodityrealreturn Strategy Fund or generate 11.03% return on investment over 90 days.

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

Commodityrealreturn Strategy F  vs.  Jpmorgan Large Cap

Commodityrealreturn

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Commodityrealreturn Strategy Fund are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Commodityrealreturn is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jpmorgan Large Cap

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Large Cap are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Jpmorgan may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Commodityrealreturn and Jpmorgan

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

The idea behind Commodityrealreturn Strategy Fund and Jpmorgan Large Cap 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.