Correlation Between Jpmorgan and The Gold

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

By analyzing existing cross correlation between Jpmorgan Research Equity and The Gold Bullion, you can compare the effects of market volatilities on Jpmorgan and The Gold 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 with a short position of The Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan and The Gold.

Diversification Opportunities for Jpmorgan and The Gold

0.39

Correlation Coefficient

Jpmorgan  The Gold

Weak diversification

The 3 months correlation between Jpmorgan and The is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Research Equity and The Gold Bullion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Bullion and Jpmorgan 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 Research Equity are associated (or correlated) with The Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Bullion has no effect on the direction of Jpmorgan i.e., Jpmorgan and The Gold go up and down completely randomly.

Pair Corralation between Jpmorgan and The Gold

Assuming the 90 days horizon Jpmorgan Research Equity is expected to under-perform the The Gold. But the mutual fund apears to be less risky and, when comparing its historical volatility, Jpmorgan Research Equity is 1.3 times less risky than The Gold. The mutual fund trades about 0.0 of its potential returns per unit of risk. The The Gold Bullion is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  2,032  in The Gold Bullion on December 21, 2024 and sell it today you would earn a total of  319.00  from holding The Gold Bullion or generate 15.7% return on investment over 90 days.

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

Jpmorgan Research Equity  vs.  The Gold Bullion

Jpmorgan Research Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jpmorgan Research Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Jpmorgan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gold Bullion

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Gold Bullion are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, The Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jpmorgan and The Gold

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

The idea behind Jpmorgan Research Equity and The Gold Bullion 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.