Correlation Between Visa and Jpmorgan Research

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

By analyzing existing cross correlation between Visa Class A and Jpmorgan Research Market, you can compare the effects of market volatilities on Visa and Jpmorgan Research 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 Visa with a short position of Jpmorgan Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Jpmorgan Research.

Diversification Opportunities for Visa and Jpmorgan Research

0.83

Correlation Coefficient

Visa  Jpmorgan Research

Very poor diversification

The 3 months correlation between Visa and Jpmorgan is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Jpmorgan Research Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Research Market and Visa 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 Visa Class A are associated (or correlated) with Jpmorgan Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Research Market has no effect on the direction of Visa i.e., Visa and Jpmorgan Research go up and down completely randomly.

Pair Corralation between Visa and Jpmorgan Research

Taking into account the 90-day investment horizon Visa Class A is expected to generate 7.05 times more return on investment than Jpmorgan Research. However, Visa is 7.05 times more volatile than Jpmorgan Research Market. It trades about 0.16 of its potential returns per unit of risk. Jpmorgan Research Market is currently generating about 0.4 per unit of risk. If you would invest  27,801  in Visa Class A on September 3, 2024 and sell it today you would earn a total of  3,707  from holding Visa Class A or generate 13.33% return on investment over 90 days.

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

Visa Class A  vs.  Jpmorgan Research Market

Visa Class A

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.

Jpmorgan Research Market

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Research Market are ranked lower than 31 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Jpmorgan Research is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and Jpmorgan Research

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

The idea behind Visa Class A and Jpmorgan Research Market 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 Global Correlations module to find global opportunities by holding instruments from different markets.