Correlation Between JPM BetaBuilders and JPM China

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

By analyzing existing cross correlation between JPM BetaBuilders Treasury and JPM China A, you can compare the effects of market volatilities on JPM BetaBuilders and JPM China 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 JPM BetaBuilders with a short position of JPM China. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPM BetaBuilders and JPM China.

Diversification Opportunities for JPM BetaBuilders and JPM China

-0.66

Correlation Coefficient

JPM BetaBuilders  JPM China

Excellent diversification

The 3 months correlation between JPM and JPM is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding JPM BetaBuilders Treasury and JPM China A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM China A and JPM 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 JPM BetaBuilders Treasury are associated (or correlated) with JPM China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM China A has no effect on the direction of JPM BetaBuilders i.e., JPM BetaBuilders and JPM China go up and down completely randomly.

Pair Corralation between JPM BetaBuilders and JPM China

Assuming the 90 days trading horizon JPM BetaBuilders Treasury is expected to generate 0.25 times more return on investment than JPM China. However, JPM BetaBuilders Treasury is 4.05 times less risky than JPM China. It trades about 0.2 of its potential returns per unit of risk. JPM China A is currently generating about -0.08 per unit of risk. If you would invest  8,720  in JPM BetaBuilders Treasury on October 9, 2024 and sell it today you would earn a total of  340.00  from holding JPM BetaBuilders Treasury or generate 3.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

JPM BetaBuilders Treasury  vs.  JPM China A

JPM BetaBuilders Treasury

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPM BetaBuilders Treasury are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, JPM BetaBuilders is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

JPM China A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPM China A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with JPM BetaBuilders and JPM China

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

The idea behind JPM BetaBuilders Treasury and JPM China A 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.