Correlation Between JPMorgan and WisdomTree Interest

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

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

Diversification Opportunities for JPMorgan and WisdomTree Interest

0.66

Correlation Coefficient

JPMorgan  WisdomTree Interest

Poor diversification

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

Pair Corralation between JPMorgan and WisdomTree Interest

Given the investment horizon of 90 days JPMorgan is expected to under-perform the WisdomTree Interest. But the etf apears to be less risky and, when comparing its historical volatility, JPMorgan is 2.01 times less risky than WisdomTree Interest. The etf trades about -0.03 of its potential returns per unit of risk. The WisdomTree Interest Rate is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,206  in WisdomTree Interest Rate on September 4, 2024 and sell it today you would earn a total of  38.00  from holding WisdomTree Interest Rate or generate 1.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	55.56%
Values	Daily Returns

JPMorgan  vs.  WisdomTree Interest Rate

JPMorgan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMorgan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, JPMorgan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

WisdomTree Interest Rate

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Interest Rate are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, WisdomTree Interest is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with JPMorgan and WisdomTree Interest

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

The idea behind JPMorgan and WisdomTree Interest Rate 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.