Correlation Between Ford and Jpmorgan Hedged

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

By analyzing existing cross correlation between Ford Motor and Jpmorgan Hedged Equity, you can compare the effects of market volatilities on Ford and Jpmorgan Hedged 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 Ford with a short position of Jpmorgan Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Jpmorgan Hedged.

Diversification Opportunities for Ford and Jpmorgan Hedged

0.53

Correlation Coefficient

Ford  Jpmorgan Hedged

Very weak diversification

The 3 months correlation between Ford and Jpmorgan is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Jpmorgan Hedged Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Hedged Equity and Ford 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 Ford Motor are associated (or correlated) with Jpmorgan Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Hedged Equity has no effect on the direction of Ford i.e., Ford and Jpmorgan Hedged go up and down completely randomly.

Pair Corralation between Ford and Jpmorgan Hedged

Taking into account the 90-day investment horizon Ford is expected to generate 1.75 times less return on investment than Jpmorgan Hedged. In addition to that, Ford is 4.75 times more volatile than Jpmorgan Hedged Equity. It trades about 0.02 of its total potential returns per unit of risk. Jpmorgan Hedged Equity is currently generating about 0.16 per unit of volatility. If you would invest  2,793  in Jpmorgan Hedged Equity on September 4, 2024 and sell it today you would earn a total of  602.00  from holding Jpmorgan Hedged Equity or generate 21.55% return on investment over 90 days.

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

Ford Motor  vs.  Jpmorgan Hedged Equity

Ford Motor

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Ford is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Jpmorgan Hedged Equity

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Hedged Equity are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Jpmorgan Hedged may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ford and Jpmorgan Hedged

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

The idea behind Ford Motor and Jpmorgan Hedged Equity 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.