Correlation Between Balanced Fund and Jpmorgan Mid

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

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

Diversification Opportunities for Balanced Fund and Jpmorgan Mid

0.77

Correlation Coefficient

Balanced Fund  Jpmorgan Mid

Poor diversification

The 3 months correlation between Balanced and Jpmorgan is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Investor and Jpmorgan Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Mid Cap and Balanced Fund 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 Balanced Fund Investor are associated (or correlated) with Jpmorgan Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Mid Cap has no effect on the direction of Balanced Fund i.e., Balanced Fund and Jpmorgan Mid go up and down completely randomly.

Pair Corralation between Balanced Fund and Jpmorgan Mid

Assuming the 90 days horizon Balanced Fund is expected to generate 4.01 times less return on investment than Jpmorgan Mid. But when comparing it to its historical volatility, Balanced Fund Investor is 2.01 times less risky than Jpmorgan Mid. It trades about 0.14 of its potential returns per unit of risk. Jpmorgan Mid Cap is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  4,840  in Jpmorgan Mid Cap on September 3, 2024 and sell it today you would earn a total of  858.00  from holding Jpmorgan Mid Cap or generate 17.73% return on investment over 90 days.

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

Balanced Fund Investor  vs.  Jpmorgan Mid Cap

Balanced Fund Investor

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Balanced Fund Investor are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Balanced Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jpmorgan Mid Cap

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Mid Cap are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Jpmorgan Mid showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Balanced Fund and Jpmorgan Mid

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

The idea behind Balanced Fund Investor and Jpmorgan Mid 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.