Correlation Between JPMorgan Equity and Dimensional Global

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

Diversification Opportunities for JPMorgan Equity and Dimensional Global

0.51

Correlation Coefficient

JPMorgan Equity  Dimensional Global

Very weak diversification

The 3 months correlation between JPMorgan and Dimensional is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Equity Premium and Dimensional Global Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Global Value 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 Dimensional Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional Global Value has no effect on the direction of JPMorgan Equity i.e., JPMorgan Equity and Dimensional Global go up and down completely randomly.

Pair Corralation between JPMorgan Equity and Dimensional Global

Assuming the 90 days trading horizon JPMorgan Equity Premium is expected to under-perform the Dimensional Global. In addition to that, JPMorgan Equity is 1.41 times more volatile than Dimensional Global Value. It trades about -0.02 of its total potential returns per unit of risk. Dimensional Global Value is currently generating about 0.16 per unit of volatility. If you would invest  2,427  in Dimensional Global Value on December 25, 2024 and sell it today you would earn a total of  139.00  from holding Dimensional Global Value or generate 5.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

JPMorgan Equity Premium  vs.  Dimensional Global Value

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. In spite of comparatively stable basic indicators, JPMorgan Equity is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Dimensional Global Value

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional Global Value are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Dimensional Global is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with JPMorgan Equity and Dimensional Global

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

The idea behind JPMorgan Equity Premium and Dimensional Global Value 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.