Correlation Between Ethereum and JPMorgan International

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

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

Diversification Opportunities for Ethereum and JPMorgan International

-0.14

Correlation Coefficient

Ethereum  JPMorgan International

Good diversification

The 3 months correlation between Ethereum and JPMorgan is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and JPMorgan International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan International and Ethereum 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 Ethereum are associated (or correlated) with JPMorgan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan International has no effect on the direction of Ethereum i.e., Ethereum and JPMorgan International go up and down completely randomly.

Pair Corralation between Ethereum and JPMorgan International

Assuming the 90 days trading horizon Ethereum is expected to generate 5.29 times more return on investment than JPMorgan International. However, Ethereum is 5.29 times more volatile than JPMorgan International Growth. It trades about 0.13 of its potential returns per unit of risk. JPMorgan International Growth is currently generating about -0.13 per unit of risk. If you would invest  247,593  in Ethereum on October 11, 2024 and sell it today you would earn a total of  85,458  from holding Ethereum or generate 34.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Ethereum  vs.  JPMorgan International Growth

Ethereum

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ethereum are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Ethereum exhibited solid returns over the last few months and may actually be approaching a breakup point.

JPMorgan International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMorgan International Growth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Etf's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Pair Trading with Ethereum and JPMorgan International

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

The idea behind Ethereum and JPMorgan International Growth 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.