Correlation Between Jpmorgan Smartretirement and Madison Investors

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

By analyzing existing cross correlation between Jpmorgan Smartretirement 2035 and Madison Investors, you can compare the effects of market volatilities on Jpmorgan Smartretirement and Madison Investors 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 Smartretirement with a short position of Madison Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan Smartretirement and Madison Investors.

Diversification Opportunities for Jpmorgan Smartretirement and Madison Investors

0.86

Correlation Coefficient

Jpmorgan Smartretirement  Madison Investors

Very poor diversification

The 3 months correlation between Jpmorgan and Madison is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Smartretirement 2035 and Madison Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Investors and Jpmorgan Smartretirement 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 Smartretirement 2035 are associated (or correlated) with Madison Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Investors has no effect on the direction of Jpmorgan Smartretirement i.e., Jpmorgan Smartretirement and Madison Investors go up and down completely randomly.

Pair Corralation between Jpmorgan Smartretirement and Madison Investors

Assuming the 90 days horizon Jpmorgan Smartretirement is expected to generate 1.41 times less return on investment than Madison Investors. But when comparing it to its historical volatility, Jpmorgan Smartretirement 2035 is 1.47 times less risky than Madison Investors. It trades about 0.09 of its potential returns per unit of risk. Madison Investors is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,894  in Madison Investors on September 13, 2024 and sell it today you would earn a total of  303.00  from holding Madison Investors or generate 10.47% return on investment over 90 days.

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

Jpmorgan Smartretirement 2035  vs.  Madison Investors

Jpmorgan Smartretirement

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Smartretirement 2035 are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Jpmorgan Smartretirement is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Madison Investors

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Madison Investors are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Madison Investors may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Jpmorgan Smartretirement and Madison Investors

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

The idea behind Jpmorgan Smartretirement 2035 and Madison Investors 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.