Correlation Between WisdomTree Emerging and JPMorgan

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

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

Diversification Opportunities for WisdomTree Emerging and JPMorgan

-0.5

Correlation Coefficient

WisdomTree Emerging  JPMorgan

Very good diversification

The 3 months correlation between WisdomTree and JPMorgan is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Emerging Markets and JPMorgan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan and WisdomTree Emerging 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 WisdomTree Emerging Markets are associated (or correlated) with JPMorgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan has no effect on the direction of WisdomTree Emerging i.e., WisdomTree Emerging and JPMorgan go up and down completely randomly.

Pair Corralation between WisdomTree Emerging and JPMorgan

If you would invest  4,182  in WisdomTree Emerging Markets on September 13, 2024 and sell it today you would earn a total of  43.00  from holding WisdomTree Emerging Markets or generate 1.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

WisdomTree Emerging Markets  vs.  JPMorgan

WisdomTree Emerging

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Emerging Markets are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, WisdomTree Emerging is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

JPMorgan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMorgan has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady primary indicators, JPMorgan is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with WisdomTree Emerging and JPMorgan

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

The idea behind WisdomTree Emerging Markets and JPMorgan 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.