Correlation Between JPM Global and JPM AC

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

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

Diversification Opportunities for JPM Global and JPM AC

0.29

Correlation Coefficient

JPM Global  JPM AC

Modest diversification

The 3 months correlation between JPM and JPM is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding JPM Global Equity and JPM AC Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM AC Asia and JPM Global 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 Global Equity are associated (or correlated) with JPM AC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM AC Asia has no effect on the direction of JPM Global i.e., JPM Global and JPM AC go up and down completely randomly.

Pair Corralation between JPM Global and JPM AC

Assuming the 90 days trading horizon JPM Global Equity is expected to under-perform the JPM AC. But the etf apears to be less risky and, when comparing its historical volatility, JPM Global Equity is 1.38 times less risky than JPM AC. The etf trades about -0.03 of its potential returns per unit of risk. The JPM AC Asia is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  174,543  in JPM AC Asia on October 25, 2024 and sell it today you would earn a total of  2,372  from holding JPM AC Asia or generate 1.36% return on investment over 90 days.

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

JPM Global Equity  vs.  JPM AC Asia

JPM Global Equity

Risk-Adjusted Performance

0 of 100

Very Weak

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

JPM AC Asia

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JPM AC Asia are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, JPM AC is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with JPM Global and JPM AC

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

The idea behind JPM Global Equity and JPM AC Asia 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.