Correlation Between Jpmorgan Equity and Horizon Active

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

Diversification Opportunities for Jpmorgan Equity and Horizon Active

0.89

Correlation Coefficient

Jpmorgan Equity  Horizon Active

Very poor diversification

The 3 months correlation between Jpmorgan and Horizon is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Equity Premium and Horizon Active Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Active Dividend 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 Horizon Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Active Dividend has no effect on the direction of Jpmorgan Equity i.e., Jpmorgan Equity and Horizon Active go up and down completely randomly.

Pair Corralation between Jpmorgan Equity and Horizon Active

Assuming the 90 days horizon Jpmorgan Equity is expected to generate 1.45 times less return on investment than Horizon Active. But when comparing it to its historical volatility, Jpmorgan Equity Premium is 1.31 times less risky than Horizon Active. It trades about 0.1 of its potential returns per unit of risk. Horizon Active Dividend is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  5,637  in Horizon Active Dividend on October 5, 2024 and sell it today you would earn a total of  1,430  from holding Horizon Active Dividend or generate 25.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.68%
Values	Daily Returns

Jpmorgan Equity Premium  vs.  Horizon Active Dividend

Jpmorgan Equity Premium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jpmorgan Equity Premium has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Jpmorgan Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Horizon Active Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Horizon Active Dividend has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Horizon Active is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jpmorgan Equity and Horizon Active

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

The idea behind Jpmorgan Equity Premium and Horizon Active Dividend 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.