Correlation Between JPMorgan Equity and Invesco Actively

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

Diversification Opportunities for JPMorgan Equity and Invesco Actively

0.2

Correlation Coefficient

JPMorgan Equity  Invesco Actively

Modest diversification

The 3 months correlation between JPMorgan and Invesco is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Equity Premium and Invesco Actively Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Actively Managed 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 Invesco Actively. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Actively Managed has no effect on the direction of JPMorgan Equity i.e., JPMorgan Equity and Invesco Actively go up and down completely randomly.

Pair Corralation between JPMorgan Equity and Invesco Actively

Given the investment horizon of 90 days JPMorgan Equity Premium is expected to under-perform the Invesco Actively. But the etf apears to be less risky and, when comparing its historical volatility, JPMorgan Equity Premium is 1.01 times less risky than Invesco Actively. The etf trades about -0.01 of its potential returns per unit of risk. The Invesco Actively Managed is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  4,585  in Invesco Actively Managed on December 29, 2024 and sell it today you would earn a total of  326.00  from holding Invesco Actively Managed or generate 7.11% return on investment over 90 days.

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

JPMorgan Equity Premium  vs.  Invesco Actively Managed

JPMorgan Equity Premium

Risk-Adjusted Performance

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.

Invesco Actively Managed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Actively Managed are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Invesco Actively may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with JPMorgan Equity and Invesco Actively

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

The idea behind JPMorgan Equity Premium and Invesco Actively Managed 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.