Correlation Between JPM BetaBuilders and JPM AC

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

Diversification Opportunities for JPM BetaBuilders and JPM AC

-0.64

Correlation Coefficient

JPM BetaBuilders  JPM AC

Excellent diversification

The 3 months correlation between JPM and JPM is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding JPM BetaBuilders Treasury and JPM AC Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM AC Asia 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 AC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM AC Asia has no effect on the direction of JPM BetaBuilders i.e., JPM BetaBuilders and JPM AC go up and down completely randomly.

Pair Corralation between JPM BetaBuilders and JPM AC

Assuming the 90 days trading horizon JPM BetaBuilders is expected to generate 1.22 times less return on investment than JPM AC. But when comparing it to its historical volatility, JPM BetaBuilders Treasury is 3.75 times less risky than JPM AC. It trades about 0.04 of its potential returns per unit of risk. JPM AC Asia is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  170,285  in JPM AC Asia on October 8, 2024 and sell it today you would earn a total of  7,180  from holding JPM AC Asia or generate 4.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

JPM BetaBuilders Treasury  vs.  JPM AC Asia

JPM BetaBuilders Treasury

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JPM BetaBuilders Treasury are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, JPM BetaBuilders may actually be approaching a critical reversion point that can send shares even higher in February 2025.

JPM AC Asia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPM AC Asia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, JPM AC is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with JPM BetaBuilders and JPM AC

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

The idea behind JPM BetaBuilders Treasury and JPM AC Asia 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.