Correlation Between JPM BetaBuilders and JPM Research

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

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

Diversification Opportunities for JPM BetaBuilders and JPM Research

0.48

Correlation Coefficient

JPM BetaBuilders  JPM Research

Very weak diversification

The 3 months correlation between JPM and JPM is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding JPM BetaBuilders China and JPM Research Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM Research Enhanced and JPM BetaBuilders 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 JPM BetaBuilders China are associated (or correlated) with JPM Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM Research Enhanced has no effect on the direction of JPM BetaBuilders i.e., JPM BetaBuilders and JPM Research go up and down completely randomly.

Pair Corralation between JPM BetaBuilders and JPM Research

Assuming the 90 days trading horizon JPM BetaBuilders China is expected to generate 0.29 times more return on investment than JPM Research. However, JPM BetaBuilders China is 3.39 times less risky than JPM Research. It trades about -0.02 of its potential returns per unit of risk. JPM Research Enhanced is currently generating about -0.15 per unit of risk. If you would invest  9,290  in JPM BetaBuilders China on December 21, 2024 and sell it today you would lose (28.00) from holding JPM BetaBuilders China or give up 0.3% of portfolio value over 90 days.

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

JPM BetaBuilders China  vs.  JPM Research Enhanced

JPM BetaBuilders China

Risk-Adjusted Performance

Very Weak

Over the last 90 days JPM BetaBuilders China has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, JPM BetaBuilders is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

JPM Research Enhanced

Risk-Adjusted Performance

Very Weak

Over the last 90 days JPM Research Enhanced has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with JPM BetaBuilders and JPM Research

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

The idea behind JPM BetaBuilders China and JPM Research Enhanced 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.