Correlation Between Quadratic Interest and JPMorgan Inflation

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

By analyzing existing cross correlation between Quadratic Interest Rate and JPMorgan Inflation Managed, you can compare the effects of market volatilities on Quadratic Interest and JPMorgan Inflation 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 Quadratic Interest with a short position of JPMorgan Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quadratic Interest and JPMorgan Inflation.

Diversification Opportunities for Quadratic Interest and JPMorgan Inflation

0.83

Correlation Coefficient

Quadratic Interest  JPMorgan Inflation

Very poor diversification

The 3 months correlation between Quadratic and JPMorgan is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Quadratic Interest Rate and JPMorgan Inflation Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Inflation and Quadratic Interest 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 Quadratic Interest Rate are associated (or correlated) with JPMorgan Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Inflation has no effect on the direction of Quadratic Interest i.e., Quadratic Interest and JPMorgan Inflation go up and down completely randomly.

Pair Corralation between Quadratic Interest and JPMorgan Inflation

Given the investment horizon of 90 days Quadratic Interest Rate is expected to generate 2.04 times more return on investment than JPMorgan Inflation. However, Quadratic Interest is 2.04 times more volatile than JPMorgan Inflation Managed. It trades about 0.2 of its potential returns per unit of risk. JPMorgan Inflation Managed is currently generating about 0.22 per unit of risk. If you would invest  1,756  in Quadratic Interest Rate on December 30, 2024 and sell it today you would earn a total of  114.00  from holding Quadratic Interest Rate or generate 6.49% return on investment over 90 days.

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

Quadratic Interest Rate  vs.  JPMorgan Inflation Managed

Quadratic Interest Rate

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Quadratic Interest Rate are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Quadratic Interest may actually be approaching a critical reversion point that can send shares even higher in April 2025.

JPMorgan Inflation

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Inflation Managed are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, JPMorgan Inflation is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Quadratic Interest and JPMorgan Inflation

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

The idea behind Quadratic Interest Rate and JPMorgan Inflation Managed 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.