Correlation Between Groupama Entreprises and JPM Global

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

By analyzing existing cross correlation between Groupama Entreprises N and JPM Global Natural, you can compare the effects of market volatilities on Groupama Entreprises and JPM Global 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 Groupama Entreprises with a short position of JPM Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Groupama Entreprises and JPM Global.

Diversification Opportunities for Groupama Entreprises and JPM Global

0.23

Correlation Coefficient

Groupama Entreprises  JPM Global

Modest diversification

The 3 months correlation between Groupama and JPM is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Groupama Entreprises N and JPM Global Natural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM Global Natural and Groupama Entreprises 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 Groupama Entreprises N are associated (or correlated) with JPM Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM Global Natural has no effect on the direction of Groupama Entreprises i.e., Groupama Entreprises and JPM Global go up and down completely randomly.

Pair Corralation between Groupama Entreprises and JPM Global

Assuming the 90 days trading horizon Groupama Entreprises N is expected to generate 0.01 times more return on investment than JPM Global. However, Groupama Entreprises N is 88.3 times less risky than JPM Global. It trades about 0.99 of its potential returns per unit of risk. JPM Global Natural is currently generating about -0.43 per unit of risk. If you would invest  59,254  in Groupama Entreprises N on September 21, 2024 and sell it today you would earn a total of  147.00  from holding Groupama Entreprises N or generate 0.25% return on investment over 90 days.

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

Groupama Entreprises N  vs.  JPM Global Natural

Groupama Entreprises

Risk-Adjusted Performance

78 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Groupama Entreprises N are ranked lower than 78 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Groupama Entreprises is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

JPM Global Natural

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPM Global Natural has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound technical and fundamental indicators, JPM Global is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Groupama Entreprises and JPM Global

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

The idea behind Groupama Entreprises N and JPM Global Natural 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.