Correlation Between Six Circles and Jpmorgan Europe

Can any of the company-specific risk be diversified away by investing in both Six Circles and Jpmorgan Europe 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 Europe 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 Europe Dynamic, you can compare the effects of market volatilities on Six Circles and Jpmorgan Europe 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 Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Six Circles and Jpmorgan Europe.

Diversification Opportunities for Six Circles and Jpmorgan Europe

0.63

Correlation Coefficient

Six Circles  Jpmorgan Europe

Poor diversification

The 3 months correlation between Six and Jpmorgan is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Six Circles International and Jpmorgan Europe Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Europe Dynamic 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 Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Europe Dynamic has no effect on the direction of Six Circles i.e., Six Circles and Jpmorgan Europe go up and down completely randomly.

Pair Corralation between Six Circles and Jpmorgan Europe

Assuming the 90 days horizon Six Circles International is expected to generate 0.91 times more return on investment than Jpmorgan Europe. However, Six Circles International is 1.1 times less risky than Jpmorgan Europe. It trades about 0.18 of its potential returns per unit of risk. Jpmorgan Europe Dynamic is currently generating about 0.09 per unit of risk. If you would invest  1,069  in Six Circles International on October 22, 2024 and sell it today you would earn a total of  23.00  from holding Six Circles International or generate 2.15% return on investment over 90 days.

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

Six Circles International  vs.  Jpmorgan Europe Dynamic

Six Circles International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Six Circles International has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Six Circles is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jpmorgan Europe Dynamic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jpmorgan Europe Dynamic has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Six Circles and Jpmorgan Europe

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

The idea behind Six Circles International and Jpmorgan Europe Dynamic 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.