Correlation Between Materials Portfolio and Jpmorgan Floating

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

By analyzing existing cross correlation between Materials Portfolio Fidelity and Jpmorgan Floating Rate, you can compare the effects of market volatilities on Materials Portfolio and Jpmorgan Floating 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 Materials Portfolio with a short position of Jpmorgan Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materials Portfolio and Jpmorgan Floating.

Diversification Opportunities for Materials Portfolio and Jpmorgan Floating

-0.4

Correlation Coefficient

Materials Portfolio  Jpmorgan Floating

Very good diversification

The 3 months correlation between Materials and Jpmorgan is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Materials Portfolio Fidelity and Jpmorgan Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Floating Rate and Materials Portfolio 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 Materials Portfolio Fidelity are associated (or correlated) with Jpmorgan Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Floating Rate has no effect on the direction of Materials Portfolio i.e., Materials Portfolio and Jpmorgan Floating go up and down completely randomly.

Pair Corralation between Materials Portfolio and Jpmorgan Floating

Assuming the 90 days horizon Materials Portfolio Fidelity is expected to under-perform the Jpmorgan Floating. In addition to that, Materials Portfolio is 7.41 times more volatile than Jpmorgan Floating Rate. It trades about -0.09 of its total potential returns per unit of risk. Jpmorgan Floating Rate is currently generating about -0.22 per unit of volatility. If you would invest  836.00  in Jpmorgan Floating Rate on December 4, 2024 and sell it today you would lose (5.00) from holding Jpmorgan Floating Rate or give up 0.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Materials Portfolio Fidelity  vs.  Jpmorgan Floating Rate

Materials Portfolio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Materials Portfolio Fidelity has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Jpmorgan Floating Rate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jpmorgan Floating Rate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Jpmorgan Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Materials Portfolio and Jpmorgan Floating

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

The idea behind Materials Portfolio Fidelity and Jpmorgan Floating Rate 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.