Correlation Between International Stock and Jpmorgan Value

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

By analyzing existing cross correlation between International Stock Fund and Jpmorgan Value Advantage, you can compare the effects of market volatilities on International Stock and Jpmorgan Value 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 International Stock with a short position of Jpmorgan Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Stock and Jpmorgan Value.

Diversification Opportunities for International Stock and Jpmorgan Value

0.64

Correlation Coefficient

International Stock  Jpmorgan Value

Poor diversification

The 3 months correlation between International and Jpmorgan is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding International Stock Fund and Jpmorgan Value Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Value Advantage and International Stock 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 International Stock Fund are associated (or correlated) with Jpmorgan Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Value Advantage has no effect on the direction of International Stock i.e., International Stock and Jpmorgan Value go up and down completely randomly.

Pair Corralation between International Stock and Jpmorgan Value

Assuming the 90 days horizon International Stock Fund is expected to generate 1.16 times more return on investment than Jpmorgan Value. However, International Stock is 1.16 times more volatile than Jpmorgan Value Advantage. It trades about 0.04 of its potential returns per unit of risk. Jpmorgan Value Advantage is currently generating about 0.02 per unit of risk. If you would invest  2,250  in International Stock Fund on December 26, 2024 and sell it today you would earn a total of  42.00  from holding International Stock Fund or generate 1.87% return on investment over 90 days.

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

International Stock Fund  vs.  Jpmorgan Value Advantage

International Stock

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in International Stock Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, International Stock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jpmorgan Value Advantage

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Value Advantage are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Jpmorgan Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with International Stock and Jpmorgan Value

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

The idea behind International Stock Fund and Jpmorgan Value Advantage 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.