Correlation Between Avantis International and JPMorgan Diversified

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

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

Diversification Opportunities for Avantis International and JPMorgan Diversified

0.9

Correlation Coefficient

Avantis International  JPMorgan Diversified

Almost no diversification

The 3 months correlation between Avantis and JPMorgan is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Avantis International Large and JPMorgan Diversified Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Diversified and Avantis International 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 Avantis International Large are associated (or correlated) with JPMorgan Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Diversified has no effect on the direction of Avantis International i.e., Avantis International and JPMorgan Diversified go up and down completely randomly.

Pair Corralation between Avantis International and JPMorgan Diversified

Given the investment horizon of 90 days Avantis International Large is expected to generate 1.18 times more return on investment than JPMorgan Diversified. However, Avantis International is 1.18 times more volatile than JPMorgan Diversified Return. It trades about 0.04 of its potential returns per unit of risk. JPMorgan Diversified Return is currently generating about 0.03 per unit of risk. If you would invest  4,506  in Avantis International Large on October 8, 2024 and sell it today you would earn a total of  693.00  from holding Avantis International Large or generate 15.38% return on investment over 90 days.

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

Avantis International Large  vs.  JPMorgan Diversified Return

Avantis International

Risk-Adjusted Performance

0 of 100

Very Weak

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

JPMorgan Diversified

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMorgan Diversified Return has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with Avantis International and JPMorgan Diversified

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

The idea behind Avantis International Large and JPMorgan Diversified Return 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.