Correlation Between Ford and Jpmorgan Europe

Can any of the company-specific risk be diversified away by investing in both Ford and Jpmorgan Europe 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 Europe 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 Europe Dynamic, you can compare the effects of market volatilities on Ford and Jpmorgan Europe 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 Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Jpmorgan Europe.

Diversification Opportunities for Ford and Jpmorgan Europe

0.52

Correlation Coefficient

Ford  Jpmorgan Europe

Very weak diversification

The 3 months correlation between Ford and Jpmorgan is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Jpmorgan Europe Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Europe Dynamic 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 Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Europe Dynamic has no effect on the direction of Ford i.e., Ford and Jpmorgan Europe go up and down completely randomly.

Pair Corralation between Ford and Jpmorgan Europe

Taking into account the 90-day investment horizon Ford is expected to generate 18.59 times less return on investment than Jpmorgan Europe. In addition to that, Ford is 2.56 times more volatile than Jpmorgan Europe Dynamic. It trades about 0.0 of its total potential returns per unit of risk. Jpmorgan Europe Dynamic is currently generating about 0.04 per unit of volatility. If you would invest  2,688  in Jpmorgan Europe Dynamic on October 22, 2024 and sell it today you would earn a total of  397.00  from holding Jpmorgan Europe Dynamic or generate 14.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Ford Motor  vs.  Jpmorgan Europe Dynamic

Ford Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Jpmorgan Europe Dynamic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jpmorgan Europe Dynamic has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Ford and Jpmorgan Europe

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

The idea behind Ford Motor and Jpmorgan Europe Dynamic 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.