Correlation Between VIIX and JPMorgan Quality

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

By analyzing existing cross correlation between VIIX and JPMorgan Quality Factor, you can compare the effects of market volatilities on VIIX and JPMorgan Quality 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 VIIX with a short position of JPMorgan Quality. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIIX and JPMorgan Quality.

Diversification Opportunities for VIIX and JPMorgan Quality

-0.83

Correlation Coefficient

VIIX  JPMorgan Quality

Pay attention - limited upside

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

Pair Corralation between VIIX and JPMorgan Quality

If you would invest  5,561  in JPMorgan Quality Factor on August 30, 2024 and sell it today you would earn a total of  391.00  from holding JPMorgan Quality Factor or generate 7.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

VIIX  vs.  JPMorgan Quality Factor

VIIX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VIIX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, VIIX is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

JPMorgan Quality Factor

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Quality Factor are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, JPMorgan Quality may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with VIIX and JPMorgan Quality

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

The idea behind VIIX and JPMorgan Quality Factor 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.