Correlation Between JPMorgan BetaBuilders and Invesco Active

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

By analyzing existing cross correlation between JPMorgan BetaBuilders MSCI and Invesco Active Real, you can compare the effects of market volatilities on JPMorgan BetaBuilders and Invesco Active 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 Invesco Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan BetaBuilders and Invesco Active.

Diversification Opportunities for JPMorgan BetaBuilders and Invesco Active

1.0

Correlation Coefficient

JPMorgan BetaBuilders  Invesco Active

No risk reduction

The 3 months correlation between JPMorgan and Invesco is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan BetaBuilders MSCI and Invesco Active Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Active Real 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 MSCI are associated (or correlated) with Invesco Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Active Real has no effect on the direction of JPMorgan BetaBuilders i.e., JPMorgan BetaBuilders and Invesco Active go up and down completely randomly.

Pair Corralation between JPMorgan BetaBuilders and Invesco Active

Given the investment horizon of 90 days JPMorgan BetaBuilders MSCI is expected to under-perform the Invesco Active. But the etf apears to be less risky and, when comparing its historical volatility, JPMorgan BetaBuilders MSCI is 1.02 times less risky than Invesco Active. The etf trades about -0.03 of its potential returns per unit of risk. The Invesco Active Real is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  9,682  in Invesco Active Real on December 1, 2024 and sell it today you would lose (179.00) from holding Invesco Active Real or give up 1.85% of portfolio value over 90 days.

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

JPMorgan BetaBuilders MSCI  vs.  Invesco Active Real

JPMorgan BetaBuilders

Risk-Adjusted Performance

Very Weak

Over the last 90 days JPMorgan BetaBuilders MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, JPMorgan BetaBuilders is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Invesco Active Real

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Active Real has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Invesco Active is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with JPMorgan BetaBuilders and Invesco Active

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

The idea behind JPMorgan BetaBuilders MSCI and Invesco Active Real 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.