Correlation Between JPMorgan Active and Invesco Global

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

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

Diversification Opportunities for JPMorgan Active and Invesco Global

-0.33

Correlation Coefficient

JPMorgan Active  Invesco Global

Very good diversification

The 3 months correlation between JPMorgan and Invesco is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Active Value and Invesco Global Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Global Water and JPMorgan Active 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 JPMorgan Active Value are associated (or correlated) with Invesco Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Global Water has no effect on the direction of JPMorgan Active i.e., JPMorgan Active and Invesco Global go up and down completely randomly.

Pair Corralation between JPMorgan Active and Invesco Global

Given the investment horizon of 90 days JPMorgan Active Value is expected to under-perform the Invesco Global. But the etf apears to be less risky and, when comparing its historical volatility, JPMorgan Active Value is 1.13 times less risky than Invesco Global. The etf trades about -0.11 of its potential returns per unit of risk. The Invesco Global Water is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  4,068  in Invesco Global Water on September 18, 2024 and sell it today you would lose (15.00) from holding Invesco Global Water or give up 0.37% of portfolio value over 90 days.

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

JPMorgan Active Value  vs.  Invesco Global Water

JPMorgan Active Value

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Active Value are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, JPMorgan Active is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Invesco Global Water

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Global Water has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Invesco Global is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with JPMorgan Active and Invesco Global

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

The idea behind JPMorgan Active Value and Invesco Global Water 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.