Correlation Between JPMorgan Equity and Proshares Russell

Can any of the company-specific risk be diversified away by investing in both JPMorgan Equity and Proshares Russell 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 Proshares Russell 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 Proshares Russell 2000, you can compare the effects of market volatilities on JPMorgan Equity and Proshares Russell 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 Proshares Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Equity and Proshares Russell.

Diversification Opportunities for JPMorgan Equity and Proshares Russell

0.31

Correlation Coefficient

JPMorgan Equity  Proshares Russell

Weak diversification

The 3 months correlation between JPMorgan and Proshares is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Equity Premium and Proshares Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proshares Russell 2000 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 Proshares Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proshares Russell 2000 has no effect on the direction of JPMorgan Equity i.e., JPMorgan Equity and Proshares Russell go up and down completely randomly.

Pair Corralation between JPMorgan Equity and Proshares Russell

Given the investment horizon of 90 days JPMorgan Equity Premium is expected to under-perform the Proshares Russell. But the etf apears to be less risky and, when comparing its historical volatility, JPMorgan Equity Premium is 8.45 times less risky than Proshares Russell. The etf trades about -0.01 of its potential returns per unit of risk. The Proshares Russell 2000 is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,888  in Proshares Russell 2000 on December 30, 2024 and sell it today you would lose (275.00) from holding Proshares Russell 2000 or give up 7.07% of portfolio value over 90 days.

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

JPMorgan Equity Premium  vs.  Proshares Russell 2000

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.

Proshares Russell 2000

Risk-Adjusted Performance

Very Weak

Over the last 90 days Proshares Russell 2000 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Proshares Russell is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with JPMorgan Equity and Proshares Russell

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

The idea behind JPMorgan Equity Premium and Proshares Russell 2000 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.