Correlation Between Six Circles and JPMorgan BetaBuilders

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

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

Diversification Opportunities for Six Circles and JPMorgan BetaBuilders

1.0

Correlation Coefficient

Six Circles  JPMorgan BetaBuilders

No risk reduction

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

Pair Corralation between Six Circles and JPMorgan BetaBuilders

Assuming the 90 days horizon Six Circles is expected to generate 1.11 times less return on investment than JPMorgan BetaBuilders. In addition to that, Six Circles is 1.01 times more volatile than JPMorgan BetaBuilders Europe. It trades about 0.19 of its total potential returns per unit of risk. JPMorgan BetaBuilders Europe is currently generating about 0.22 per unit of volatility. If you would invest  5,528  in JPMorgan BetaBuilders Europe on December 28, 2024 and sell it today you would earn a total of  723.00  from holding JPMorgan BetaBuilders Europe or generate 13.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

Six Circles International  vs.  JPMorgan BetaBuilders Europe

Six Circles International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Six Circles International are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Six Circles may actually be approaching a critical reversion point that can send shares even higher in April 2025.

JPMorgan BetaBuilders

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan BetaBuilders Europe are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, JPMorgan BetaBuilders unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Six Circles and JPMorgan BetaBuilders

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

The idea behind Six Circles International and JPMorgan BetaBuilders Europe 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.