Correlation Between JPMorgan Equity and Pacer Global

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

Diversification Opportunities for JPMorgan Equity and Pacer Global

0.08

Correlation Coefficient

JPMorgan Equity  Pacer Global

Significant diversification

The 3 months correlation between JPMorgan and Pacer is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Equity Premium and Pacer Global Cash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Global Cash 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 Pacer Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Global Cash has no effect on the direction of JPMorgan Equity i.e., JPMorgan Equity and Pacer Global go up and down completely randomly.

Pair Corralation between JPMorgan Equity and Pacer Global

Given the investment horizon of 90 days JPMorgan Equity Premium is expected to under-perform the Pacer Global. In addition to that, JPMorgan Equity is 1.05 times more volatile than Pacer Global Cash. It trades about -0.01 of its total potential returns per unit of risk. Pacer Global Cash is currently generating about 0.27 per unit of volatility. If you would invest  3,352  in Pacer Global Cash on December 29, 2024 and sell it today you would earn a total of  364.00  from holding Pacer Global Cash or generate 10.86% return on investment over 90 days.

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

JPMorgan Equity Premium  vs.  Pacer Global Cash

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.

Pacer Global Cash

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Global Cash are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Pacer Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with JPMorgan Equity and Pacer Global

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

The idea behind JPMorgan Equity Premium and Pacer Global Cash 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 Transaction History module to view history of all your transactions and understand their impact on performance.