Correlation Between AXA World and JPMIF Bond

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Can any of the company-specific risk be diversified away by investing in both AXA World and JPMIF Bond 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 AXA World and JPMIF Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AXA World Funds and JPMIF Bond Fund, you can compare the effects of market volatilities on AXA World and JPMIF Bond 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 AXA World with a short position of JPMIF Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXA World and JPMIF Bond.

Diversification Opportunities for AXA World and JPMIF Bond

-0.17
  Correlation Coefficient

Good diversification

The 3 months correlation between AXA and JPMIF is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding AXA World Funds and JPMIF Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMIF Bond Fund and AXA World 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 AXA World Funds are associated (or correlated) with JPMIF Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMIF Bond Fund has no effect on the direction of AXA World i.e., AXA World and JPMIF Bond go up and down completely randomly.

Pair Corralation between AXA World and JPMIF Bond

Assuming the 90 days trading horizon AXA World Funds is expected to under-perform the JPMIF Bond. But the fund apears to be less risky and, when comparing its historical volatility, AXA World Funds is 1.06 times less risky than JPMIF Bond. The fund trades about -0.27 of its potential returns per unit of risk. The JPMIF Bond Fund is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  23,079  in JPMIF Bond Fund on October 5, 2024 and sell it today you would lose (48.00) from holding JPMIF Bond Fund or give up 0.21% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

AXA World Funds  vs.  JPMIF Bond Fund

 Performance 
       Timeline  
AXA World Funds 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AXA World Funds has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable basic indicators, AXA World is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.
JPMIF Bond Fund 

Risk-Adjusted Performance

0 of 100

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

AXA World and JPMIF Bond Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AXA World and JPMIF Bond

The main advantage of trading using opposite AXA World and JPMIF Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXA World position performs unexpectedly, JPMIF Bond 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 JPMIF Bond will offset losses from the drop in JPMIF Bond's long position.
The idea behind AXA World Funds and JPMIF Bond Fund 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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