Correlation Between JP Morgan and KraneShares

Can any of the company-specific risk be diversified away by investing in both JP Morgan and KraneShares 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 KraneShares 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 KraneShares, you can compare the effects of market volatilities on JP Morgan and KraneShares 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 KraneShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of JP Morgan and KraneShares.

Diversification Opportunities for JP Morgan and KraneShares

-0.35

Correlation Coefficient

JP Morgan  KraneShares

Very good diversification

The 3 months correlation between JCTR and KraneShares is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding JP Morgan Exchange Traded and KraneShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares 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 KraneShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares has no effect on the direction of JP Morgan i.e., JP Morgan and KraneShares go up and down completely randomly.

Pair Corralation between JP Morgan and KraneShares

Given the investment horizon of 90 days JP Morgan Exchange Traded is expected to generate 0.51 times more return on investment than KraneShares. However, JP Morgan Exchange Traded is 1.98 times less risky than KraneShares. It trades about 0.11 of its potential returns per unit of risk. KraneShares is currently generating about -0.04 per unit of risk. If you would invest  5,377  in JP Morgan Exchange Traded on October 26, 2024 and sell it today you would earn a total of  2,898  from holding JP Morgan Exchange Traded or generate 53.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	23.68%
Values	Daily Returns

JP Morgan Exchange Traded  vs.  KraneShares

JP Morgan Exchange

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JP Morgan Exchange Traded are ranked lower than 8 (%) 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.

KraneShares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KraneShares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, KraneShares is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with JP Morgan and KraneShares

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

The idea behind JP Morgan Exchange Traded and KraneShares 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.