Correlation Between Jpmorgan Hedged and Primecap Odyssey

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

By analyzing existing cross correlation between Jpmorgan Hedged Equity and Primecap Odyssey Growth, you can compare the effects of market volatilities on Jpmorgan Hedged and Primecap Odyssey 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 Hedged with a short position of Primecap Odyssey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan Hedged and Primecap Odyssey.

Diversification Opportunities for Jpmorgan Hedged and Primecap Odyssey

0.96

Correlation Coefficient

Jpmorgan Hedged  Primecap Odyssey

Almost no diversification

The 3 months correlation between Jpmorgan and Primecap is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Hedged Equity and Primecap Odyssey Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primecap Odyssey Growth and Jpmorgan Hedged 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 Hedged Equity are associated (or correlated) with Primecap Odyssey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primecap Odyssey Growth has no effect on the direction of Jpmorgan Hedged i.e., Jpmorgan Hedged and Primecap Odyssey go up and down completely randomly.

Pair Corralation between Jpmorgan Hedged and Primecap Odyssey

Assuming the 90 days horizon Jpmorgan Hedged is expected to generate 1.28 times less return on investment than Primecap Odyssey. But when comparing it to its historical volatility, Jpmorgan Hedged Equity is 3.81 times less risky than Primecap Odyssey. It trades about 0.18 of its potential returns per unit of risk. Primecap Odyssey Growth is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,465  in Primecap Odyssey Growth on September 2, 2024 and sell it today you would earn a total of  800.00  from holding Primecap Odyssey Growth or generate 23.09% return on investment over 90 days.

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

Jpmorgan Hedged Equity  vs.  Primecap Odyssey Growth

Jpmorgan Hedged Equity

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Hedged Equity are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Jpmorgan Hedged is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Primecap Odyssey Growth

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Primecap Odyssey Growth are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Primecap Odyssey may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Jpmorgan Hedged and Primecap Odyssey

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

The idea behind Jpmorgan Hedged Equity and Primecap Odyssey Growth 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.