Correlation Between JPMorgan BetaBuilders and Pacer Trendpilot

Can any of the company-specific risk be diversified away by investing in both JPMorgan BetaBuilders and Pacer Trendpilot 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 Pacer Trendpilot 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 Pacer Trendpilot European, you can compare the effects of market volatilities on JPMorgan BetaBuilders and Pacer Trendpilot 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 Pacer Trendpilot. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan BetaBuilders and Pacer Trendpilot.

Diversification Opportunities for JPMorgan BetaBuilders and Pacer Trendpilot

0.97

Correlation Coefficient

JPMorgan BetaBuilders  Pacer Trendpilot

Almost no diversification

The 3 months correlation between JPMorgan and Pacer is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan BetaBuilders Europe and Pacer Trendpilot European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Trendpilot European 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 Pacer Trendpilot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Trendpilot European has no effect on the direction of JPMorgan BetaBuilders i.e., JPMorgan BetaBuilders and Pacer Trendpilot go up and down completely randomly.

Pair Corralation between JPMorgan BetaBuilders and Pacer Trendpilot

Given the investment horizon of 90 days JPMorgan BetaBuilders is expected to generate 1.18 times less return on investment than Pacer Trendpilot. But when comparing it to its historical volatility, JPMorgan BetaBuilders Europe is 1.15 times less risky than Pacer Trendpilot. It trades about 0.21 of its potential returns per unit of risk. Pacer Trendpilot European is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2,400  in Pacer Trendpilot European on December 29, 2024 and sell it today you would earn a total of  366.00  from holding Pacer Trendpilot European or generate 15.25% return on investment over 90 days.

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

JPMorgan BetaBuilders Europe  vs.  Pacer Trendpilot European

JPMorgan BetaBuilders

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan BetaBuilders Europe are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, JPMorgan BetaBuilders unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pacer Trendpilot European

Risk-Adjusted Performance

Solid

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

Pair Trading with JPMorgan BetaBuilders and Pacer Trendpilot

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

The idea behind JPMorgan BetaBuilders Europe and Pacer Trendpilot European 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 Anywhere module to track or share privately all of your investments from the convenience of any device.