Correlation Between BB Biotech and JPMorgan ETFs

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

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

Diversification Opportunities for BB Biotech and JPMorgan ETFs

-0.28

Correlation Coefficient

BB Biotech  JPMorgan ETFs

Very good diversification

The 3 months correlation between BION and JPMorgan is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding BB Biotech AG and JPMorgan ETFs ICAV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan ETFs ICAV and BB Biotech 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 BB Biotech AG are associated (or correlated) with JPMorgan ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan ETFs ICAV has no effect on the direction of BB Biotech i.e., BB Biotech and JPMorgan ETFs go up and down completely randomly.

Pair Corralation between BB Biotech and JPMorgan ETFs

Assuming the 90 days trading horizon BB Biotech AG is expected to under-perform the JPMorgan ETFs. In addition to that, BB Biotech is 1.72 times more volatile than JPMorgan ETFs ICAV. It trades about -0.21 of its total potential returns per unit of risk. JPMorgan ETFs ICAV is currently generating about 0.11 per unit of volatility. If you would invest  4,242  in JPMorgan ETFs ICAV on September 12, 2024 and sell it today you would earn a total of  68.00  from holding JPMorgan ETFs ICAV or generate 1.6% return on investment over 90 days.

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

BB Biotech AG  vs.  JPMorgan ETFs ICAV

BB Biotech AG

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BB Biotech AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, BB Biotech is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

JPMorgan ETFs ICAV

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan ETFs ICAV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, JPMorgan ETFs is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with BB Biotech and JPMorgan ETFs

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

The idea behind BB Biotech AG and JPMorgan ETFs ICAV 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..