Correlation Between Algorand and JPMorgan ETFs

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

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

Diversification Opportunities for Algorand and JPMorgan ETFs

-0.16

Correlation Coefficient

Algorand  JPMorgan ETFs

Good diversification

The 3 months correlation between Algorand and JPMorgan is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Algorand and JPMorgan ETFs ICAV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan ETFs ICAV and Algorand 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 Algorand are associated (or correlated) with JPMorgan ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan ETFs ICAV has no effect on the direction of Algorand i.e., Algorand and JPMorgan ETFs go up and down completely randomly.

Pair Corralation between Algorand and JPMorgan ETFs

Assuming the 90 days trading horizon Algorand is expected to under-perform the JPMorgan ETFs. In addition to that, Algorand is 106.13 times more volatile than JPMorgan ETFs ICAV. It trades about -0.05 of its total potential returns per unit of risk. JPMorgan ETFs ICAV is currently generating about 0.17 per unit of volatility. If you would invest  10,111  in JPMorgan ETFs ICAV on October 10, 2024 and sell it today you would earn a total of  23.00  from holding JPMorgan ETFs ICAV or generate 0.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.27%
Values	Daily Returns

Algorand  vs.  JPMorgan ETFs ICAV

Algorand

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Algorand are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Algorand exhibited solid returns over the last few months and may actually be approaching a breakup point.

JPMorgan ETFs ICAV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMorgan ETFs ICAV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, JPMorgan ETFs is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Algorand and JPMorgan ETFs

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

The idea behind Algorand and JPMorgan ETFs ICAV 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.