Correlation Between Jpmorgan Small and Semiconductor Ultrasector

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

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

Diversification Opportunities for Jpmorgan Small and Semiconductor Ultrasector

0.58

Correlation Coefficient

Jpmorgan Small  Semiconductor Ultrasector

Very weak diversification

The 3 months correlation between Jpmorgan and Semiconductor is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Small Cap and Semiconductor Ultrasector Prof in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semiconductor Ultrasector and Jpmorgan Small 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 Small Cap are associated (or correlated) with Semiconductor Ultrasector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semiconductor Ultrasector has no effect on the direction of Jpmorgan Small i.e., Jpmorgan Small and Semiconductor Ultrasector go up and down completely randomly.

Pair Corralation between Jpmorgan Small and Semiconductor Ultrasector

Assuming the 90 days horizon Jpmorgan Small Cap is expected to generate 0.61 times more return on investment than Semiconductor Ultrasector. However, Jpmorgan Small Cap is 1.64 times less risky than Semiconductor Ultrasector. It trades about 0.24 of its potential returns per unit of risk. Semiconductor Ultrasector Profund is currently generating about 0.03 per unit of risk. If you would invest  2,911  in Jpmorgan Small Cap on September 4, 2024 and sell it today you would earn a total of  254.00  from holding Jpmorgan Small Cap or generate 8.73% return on investment over 90 days.

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

Jpmorgan Small Cap  vs.  Semiconductor Ultrasector Prof

Jpmorgan Small Cap

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Small Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Jpmorgan Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Semiconductor Ultrasector

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Semiconductor Ultrasector Profund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Semiconductor Ultrasector showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jpmorgan Small and Semiconductor Ultrasector

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

The idea behind Jpmorgan Small Cap and Semiconductor Ultrasector Profund 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.