Correlation Between JPMIF Bond and FF European

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

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

Diversification Opportunities for JPMIF Bond and FF European

0.66

Correlation Coefficient

JPMIF Bond  FF European

Poor diversification

The 3 months correlation between JPMIF and FJ2B is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding JPMIF Bond Fund and FF European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FF European and JPMIF Bond 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 JPMIF Bond Fund are associated (or correlated) with FF European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FF European has no effect on the direction of JPMIF Bond i.e., JPMIF Bond and FF European go up and down completely randomly.

Pair Corralation between JPMIF Bond and FF European

Assuming the 90 days trading horizon JPMIF Bond Fund is expected to generate 0.68 times more return on investment than FF European. However, JPMIF Bond Fund is 1.47 times less risky than FF European. It trades about 0.1 of its potential returns per unit of risk. FF European is currently generating about 0.03 per unit of risk. If you would invest  22,710  in JPMIF Bond Fund on September 22, 2024 and sell it today you would earn a total of  251.00  from holding JPMIF Bond Fund or generate 1.11% return on investment over 90 days.

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

JPMIF Bond Fund  vs.  FF European

JPMIF Bond Fund

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPMIF Bond Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, JPMIF Bond is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

FF European

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FF European are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, FF European is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with JPMIF Bond and FF European

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

The idea behind JPMIF Bond Fund and FF European 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.