Correlation Between JPMorgan Equity and ZEGA Buy

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

Diversification Opportunities for JPMorgan Equity and ZEGA Buy

0.68

Correlation Coefficient

JPMorgan Equity  ZEGA Buy

Poor diversification

The 3 months correlation between JPMorgan and ZEGA is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Equity Premium and ZEGA Buy and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZEGA Buy 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 ZEGA Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZEGA Buy has no effect on the direction of JPMorgan Equity i.e., JPMorgan Equity and ZEGA Buy go up and down completely randomly.

Pair Corralation between JPMorgan Equity and ZEGA Buy

Given the investment horizon of 90 days JPMorgan Equity Premium is expected to generate 0.82 times more return on investment than ZEGA Buy. However, JPMorgan Equity Premium is 1.22 times less risky than ZEGA Buy. It trades about -0.01 of its potential returns per unit of risk. ZEGA Buy and is currently generating about -0.11 per unit of risk. If you would invest  5,693  in JPMorgan Equity Premium on December 29, 2024 and sell it today you would lose (25.00) from holding JPMorgan Equity Premium or give up 0.44% of portfolio value over 90 days.

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

JPMorgan Equity Premium  vs.  ZEGA Buy and

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.

ZEGA Buy

Risk-Adjusted Performance

Very Weak

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

Pair Trading with JPMorgan Equity and ZEGA Buy

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

The idea behind JPMorgan Equity Premium and ZEGA Buy and 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.