Correlation Between Jpmorgan Government and Long-term

Can any of the company-specific risk be diversified away by investing in both Jpmorgan Government and Long-term 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 Government and Long-term into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jpmorgan Government Bond and Long Term Government Fund, you can compare the effects of market volatilities on Jpmorgan Government and Long-term 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 Government with a short position of Long-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan Government and Long-term.

Diversification Opportunities for Jpmorgan Government and Long-term

0.98

Correlation Coefficient

Jpmorgan Government  Long-term

Almost no diversification

The 3 months correlation between Jpmorgan and Long-term is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Government Bond and Long Term Government Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Term Government and Jpmorgan Government 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 Government Bond are associated (or correlated) with Long-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Term Government has no effect on the direction of Jpmorgan Government i.e., Jpmorgan Government and Long-term go up and down completely randomly.

Pair Corralation between Jpmorgan Government and Long-term

Assuming the 90 days horizon Jpmorgan Government is expected to generate 1.77 times less return on investment than Long-term. But when comparing it to its historical volatility, Jpmorgan Government Bond is 2.53 times less risky than Long-term. It trades about 0.16 of its potential returns per unit of risk. Long Term Government Fund is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,356  in Long Term Government Fund on December 23, 2024 and sell it today you would earn a total of  66.00  from holding Long Term Government Fund or generate 4.87% return on investment over 90 days.

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

Jpmorgan Government Bond  vs.  Long Term Government Fund

Jpmorgan Government Bond

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Government Bond are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Jpmorgan Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Long Term Government

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Long Term Government Fund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Long-term 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 Government and Long-term

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

The idea behind Jpmorgan Government Bond and Long Term Government Fund 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.