Correlation Between JPMorgan Equity and REX AI

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

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

Diversification Opportunities for JPMorgan Equity and REX AI

0.72

Correlation Coefficient

JPMorgan Equity  REX AI

Poor diversification

The 3 months correlation between JPMorgan and REX is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Equity Premium and REX AI Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REX AI Equity and JPMorgan Equity 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 Equity Premium are associated (or correlated) with REX AI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REX AI Equity has no effect on the direction of JPMorgan Equity i.e., JPMorgan Equity and REX AI go up and down completely randomly.

Pair Corralation between JPMorgan Equity and REX AI

Given the investment horizon of 90 days JPMorgan Equity is expected to generate 2.57 times less return on investment than REX AI. But when comparing it to its historical volatility, JPMorgan Equity Premium is 2.46 times less risky than REX AI. It trades about 0.09 of its potential returns per unit of risk. REX AI Equity is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  4,374  in REX AI Equity on September 22, 2024 and sell it today you would earn a total of  719.00  from holding REX AI Equity or generate 16.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	28.43%
Values	Daily Returns

JPMorgan Equity Premium  vs.  REX AI Equity

JPMorgan Equity Premium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMorgan Equity Premium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, JPMorgan Equity is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

REX AI Equity

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in REX AI Equity are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, REX AI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with JPMorgan Equity and REX AI

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

The idea behind JPMorgan Equity Premium and REX AI Equity 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.