Correlation Between JPMorgan BetaBuilders and Six Circles

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

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

Diversification Opportunities for JPMorgan BetaBuilders and Six Circles

0.95

Correlation Coefficient

JPMorgan BetaBuilders  Six Circles

Almost no diversification

The 3 months correlation between JPMorgan and Six is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan BetaBuilders Europe and Six Circles International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Six Circles International and JPMorgan BetaBuilders 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 JPMorgan BetaBuilders Europe are associated (or correlated) with Six Circles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Six Circles International has no effect on the direction of JPMorgan BetaBuilders i.e., JPMorgan BetaBuilders and Six Circles go up and down completely randomly.

Pair Corralation between JPMorgan BetaBuilders and Six Circles

Given the investment horizon of 90 days JPMorgan BetaBuilders Europe is expected to under-perform the Six Circles. But the etf apears to be less risky and, when comparing its historical volatility, JPMorgan BetaBuilders Europe is 1.03 times less risky than Six Circles. The etf trades about -0.11 of its potential returns per unit of risk. The Six Circles International is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  1,149  in Six Circles International on September 4, 2024 and sell it today you would lose (24.00) from holding Six Circles International or give up 2.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.24%
Values	Daily Returns

JPMorgan BetaBuilders Europe  vs.  Six Circles International

JPMorgan BetaBuilders

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMorgan BetaBuilders Europe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, JPMorgan BetaBuilders is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Six Circles International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Six Circles International has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Six Circles is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JPMorgan BetaBuilders and Six Circles

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

The idea behind JPMorgan BetaBuilders Europe and Six Circles International 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.