Correlation Between FF Global and JPM Global

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

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

Diversification Opportunities for FF Global and JPM Global

0.31

Correlation Coefficient

FF Global  JPM Global

Weak diversification

The 3 months correlation between FJ2P and JPM is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding FF Global and JPM Global Natural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM Global Natural and FF Global 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 Global are associated (or correlated) with JPM Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM Global Natural has no effect on the direction of FF Global i.e., FF Global and JPM Global go up and down completely randomly.

Pair Corralation between FF Global and JPM Global

Assuming the 90 days trading horizon FF Global is expected to generate 1.09 times more return on investment than JPM Global. However, FF Global is 1.09 times more volatile than JPM Global Natural. It trades about 0.17 of its potential returns per unit of risk. JPM Global Natural is currently generating about -0.5 per unit of risk. If you would invest  7,121  in FF Global on September 22, 2024 and sell it today you would earn a total of  277.00  from holding FF Global or generate 3.89% return on investment over 90 days.

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

FF Global  vs.  JPM Global Natural

FF Global

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FF Global are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather weak technical and fundamental indicators, FF Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

JPM Global Natural

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPM Global Natural has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound technical and fundamental indicators, JPM Global is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with FF Global and JPM Global

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

The idea behind FF Global and JPM Global Natural 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.