Correlation Between Xtrackers FTSE and JPMorgan Diversified

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

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

Diversification Opportunities for Xtrackers FTSE and JPMorgan Diversified

0.76

Correlation Coefficient

Xtrackers FTSE  JPMorgan Diversified

Poor diversification

The 3 months correlation between Xtrackers and JPMorgan is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers FTSE Developed and JPMorgan Diversified Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Diversified and Xtrackers FTSE 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 Xtrackers FTSE Developed are associated (or correlated) with JPMorgan Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Diversified has no effect on the direction of Xtrackers FTSE i.e., Xtrackers FTSE and JPMorgan Diversified go up and down completely randomly.

Pair Corralation between Xtrackers FTSE and JPMorgan Diversified

Given the investment horizon of 90 days Xtrackers FTSE is expected to generate 1.41 times less return on investment than JPMorgan Diversified. In addition to that, Xtrackers FTSE is 1.08 times more volatile than JPMorgan Diversified Return. It trades about 0.04 of its total potential returns per unit of risk. JPMorgan Diversified Return is currently generating about 0.06 per unit of volatility. If you would invest  9,571  in JPMorgan Diversified Return on October 25, 2024 and sell it today you would earn a total of  2,245  from holding JPMorgan Diversified Return or generate 23.46% return on investment over 90 days.

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

Xtrackers FTSE Developed  vs.  JPMorgan Diversified Return

Xtrackers FTSE Developed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtrackers FTSE Developed has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Xtrackers FTSE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

JPMorgan Diversified

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Diversified Return are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, JPMorgan Diversified is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Xtrackers FTSE and JPMorgan Diversified

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

The idea behind Xtrackers FTSE Developed and JPMorgan Diversified Return 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..