Correlation Between FF European and JPM America

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

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

Diversification Opportunities for FF European and JPM America

0.0

Correlation Coefficient

FF European  JPM America

Pay attention - limited upside

The 3 months correlation between FJ2B and JPM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding FF European and JPM America Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM America Equity and FF European 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 FF European are associated (or correlated) with JPM America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM America Equity has no effect on the direction of FF European i.e., FF European and JPM America go up and down completely randomly.

Pair Corralation between FF European and JPM America

If you would invest  36,013  in JPM America Equity on October 5, 2024 and sell it today you would earn a total of  7,676  from holding JPM America Equity or generate 21.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

FF European  vs.  JPM America Equity

FF European

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FF European has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, FF European is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

JPM America Equity

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days JPM America Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather unsteady technical and fundamental indicators, JPM America may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with FF European and JPM America

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

The idea behind FF European and JPM America 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 Commodity Directory module to find actively traded commodities issued by global exchanges.