Correlation Between JPMorgan Nasdaq and Main Buywrite

Can any of the company-specific risk be diversified away by investing in both JPMorgan Nasdaq and Main Buywrite 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 Nasdaq and Main Buywrite into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JPMorgan Nasdaq Equity and Main Buywrite ETF, you can compare the effects of market volatilities on JPMorgan Nasdaq and Main Buywrite 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 Nasdaq with a short position of Main Buywrite. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Nasdaq and Main Buywrite.

Diversification Opportunities for JPMorgan Nasdaq and Main Buywrite

0.68

Correlation Coefficient

JPMorgan Nasdaq  Main Buywrite

Poor diversification

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

Pair Corralation between JPMorgan Nasdaq and Main Buywrite

Given the investment horizon of 90 days JPMorgan Nasdaq Equity is expected to under-perform the Main Buywrite. In addition to that, JPMorgan Nasdaq is 2.74 times more volatile than Main Buywrite ETF. It trades about -0.06 of its total potential returns per unit of risk. Main Buywrite ETF is currently generating about -0.01 per unit of volatility. If you would invest  1,382  in Main Buywrite ETF on December 28, 2024 and sell it today you would lose (4.00) from holding Main Buywrite ETF or give up 0.29% of portfolio value over 90 days.

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

JPMorgan Nasdaq Equity  vs.  Main Buywrite ETF

JPMorgan Nasdaq Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days JPMorgan Nasdaq Equity has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, JPMorgan Nasdaq is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Main Buywrite ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days Main Buywrite ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Main Buywrite is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with JPMorgan Nasdaq and Main Buywrite

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

The idea behind JPMorgan Nasdaq Equity and Main Buywrite ETF 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.