Correlation Between JPMorgan Equity and Global X

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

Diversification Opportunities for JPMorgan Equity and Global X

0.52

Correlation Coefficient

JPMorgan Equity  Global X

Very weak diversification

The 3 months correlation between JPMorgan and Global is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Equity Premium and Global X Russell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Russell 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Russell has no effect on the direction of JPMorgan Equity i.e., JPMorgan Equity and Global X go up and down completely randomly.

Pair Corralation between JPMorgan Equity and Global X

Given the investment horizon of 90 days JPMorgan Equity Premium is expected to generate 0.56 times more return on investment than Global X. However, JPMorgan Equity Premium is 1.77 times less risky than Global X. It trades about 0.01 of its potential returns per unit of risk. Global X Russell is currently generating about -0.06 per unit of risk. If you would invest  5,717  in JPMorgan Equity Premium on December 20, 2024 and sell it today you would earn a total of  10.00  from holding JPMorgan Equity Premium or generate 0.17% return on investment over 90 days.

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

JPMorgan Equity Premium  vs.  Global X Russell

JPMorgan Equity Premium

Risk-Adjusted Performance

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.

Global X Russell

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X Russell has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Global X is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with JPMorgan Equity and Global X

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

The idea behind JPMorgan Equity Premium and Global X Russell 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.