Correlation Between SPDR SP and JP Morgan

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

By analyzing existing cross correlation between SPDR SP Global and JP Morgan Exchange Traded, you can compare the effects of market volatilities on SPDR SP and JP Morgan 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 SPDR SP with a short position of JP Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and JP Morgan.

Diversification Opportunities for SPDR SP and JP Morgan

-0.01

Correlation Coefficient

SPDR SP  JP Morgan

Good diversification

The 3 months correlation between SPDR and BLLD is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Global and JP Morgan Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JP Morgan Exchange and SPDR SP 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 SPDR SP Global are associated (or correlated) with JP Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JP Morgan Exchange has no effect on the direction of SPDR SP i.e., SPDR SP and JP Morgan go up and down completely randomly.

Pair Corralation between SPDR SP and JP Morgan

Considering the 90-day investment horizon SPDR SP Global is expected to generate 0.96 times more return on investment than JP Morgan. However, SPDR SP Global is 1.04 times less risky than JP Morgan. It trades about 0.0 of its potential returns per unit of risk. JP Morgan Exchange Traded is currently generating about -0.19 per unit of risk. If you would invest  6,101  in SPDR SP Global on September 16, 2024 and sell it today you would lose (3.00) from holding SPDR SP Global or give up 0.05% of portfolio value over 90 days.

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

SPDR SP Global  vs.  JP Morgan Exchange Traded

SPDR SP Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR SP Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, SPDR SP is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

JP Morgan Exchange

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JP Morgan Exchange Traded has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with SPDR SP and JP Morgan

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

The idea behind SPDR SP Global and JP Morgan Exchange Traded 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.