Correlation Between Jpmorgan Emerging and American Beacon

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

By analyzing existing cross correlation between Jpmorgan Emerging Markets and American Beacon The, you can compare the effects of market volatilities on Jpmorgan Emerging and American Beacon 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 Emerging with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan Emerging and American Beacon.

Diversification Opportunities for Jpmorgan Emerging and American Beacon

0.56

Correlation Coefficient

Jpmorgan Emerging  American Beacon

Very weak diversification

The 3 months correlation between Jpmorgan and American is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Emerging Markets and American Beacon The in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon and Jpmorgan Emerging 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 Emerging Markets are associated (or correlated) with American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon has no effect on the direction of Jpmorgan Emerging i.e., Jpmorgan Emerging and American Beacon go up and down completely randomly.

Pair Corralation between Jpmorgan Emerging and American Beacon

Assuming the 90 days horizon Jpmorgan Emerging is expected to generate 2.11 times less return on investment than American Beacon. In addition to that, Jpmorgan Emerging is 1.22 times more volatile than American Beacon The. It trades about 0.04 of its total potential returns per unit of risk. American Beacon The is currently generating about 0.1 per unit of volatility. If you would invest  2,070  in American Beacon The on October 21, 2024 and sell it today you would earn a total of  24.00  from holding American Beacon The or generate 1.16% return on investment over 90 days.

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

Jpmorgan Emerging Markets  vs.  American Beacon The

Jpmorgan Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

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

American Beacon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Beacon The has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Jpmorgan Emerging and American Beacon

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

The idea behind Jpmorgan Emerging Markets and American Beacon The 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.