Correlation Between JP Morgan and FlexShares STOXX

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

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

Diversification Opportunities for JP Morgan and FlexShares STOXX

0.99

Correlation Coefficient

JP Morgan  FlexShares STOXX

No risk reduction

The 3 months correlation between JCTR and FlexShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding JP Morgan Exchange Traded and FlexShares STOXX ESG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares STOXX ESG and JP Morgan 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 JP Morgan Exchange Traded are associated (or correlated) with FlexShares STOXX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares STOXX ESG has no effect on the direction of JP Morgan i.e., JP Morgan and FlexShares STOXX go up and down completely randomly.

Pair Corralation between JP Morgan and FlexShares STOXX

Given the investment horizon of 90 days JP Morgan Exchange Traded is expected to generate 1.12 times more return on investment than FlexShares STOXX. However, JP Morgan is 1.12 times more volatile than FlexShares STOXX ESG. It trades about -0.12 of its potential returns per unit of risk. FlexShares STOXX ESG is currently generating about -0.13 per unit of risk. If you would invest  8,212  in JP Morgan Exchange Traded on October 11, 2024 and sell it today you would lose (200.00) from holding JP Morgan Exchange Traded or give up 2.44% of portfolio value over 90 days.

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

JP Morgan Exchange Traded  vs.  FlexShares STOXX ESG

JP Morgan Exchange

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JP Morgan Exchange Traded are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, JP Morgan is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

FlexShares STOXX ESG

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FlexShares STOXX ESG are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, FlexShares STOXX is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with JP Morgan and FlexShares STOXX

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

The idea behind JP Morgan Exchange Traded and FlexShares STOXX ESG 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.