Correlation Between JP Morgan and SPDR SP

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

By analyzing existing cross correlation between JP Morgan Exchange Traded and SPDR SP Kensho, you can compare the effects of market volatilities on JP Morgan and SPDR SP 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 JP Morgan with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of JP Morgan and SPDR SP.

Diversification Opportunities for JP Morgan and SPDR SP

0.16

Correlation Coefficient

JP Morgan  SPDR SP

Average diversification

The 3 months correlation between BLLD and SPDR is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding JP Morgan Exchange Traded and SPDR SP Kensho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Kensho and JP Morgan 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 JP Morgan Exchange Traded are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Kensho has no effect on the direction of JP Morgan i.e., JP Morgan and SPDR SP go up and down completely randomly.

Pair Corralation between JP Morgan and SPDR SP

Given the investment horizon of 90 days JP Morgan Exchange Traded is expected to generate 0.68 times more return on investment than SPDR SP. However, JP Morgan Exchange Traded is 1.46 times less risky than SPDR SP. It trades about -0.3 of its potential returns per unit of risk. SPDR SP Kensho is currently generating about -0.27 per unit of risk. If you would invest  4,918  in JP Morgan Exchange Traded on October 7, 2024 and sell it today you would lose (240.00) from holding JP Morgan Exchange Traded or give up 4.88% of portfolio value over 90 days.

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

JP Morgan Exchange Traded  vs.  SPDR SP Kensho

JP Morgan Exchange

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JP Morgan Exchange Traded has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

SPDR SP Kensho

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with JP Morgan and SPDR SP

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

The idea behind JP Morgan Exchange Traded and SPDR SP Kensho 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.