Correlation Between Jpmorgan Emerging and Blackrock Midcap

Can any of the company-specific risk be diversified away by investing in both Jpmorgan Emerging and Blackrock Midcap 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 Blackrock Midcap 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 Blackrock Midcap Index, you can compare the effects of market volatilities on Jpmorgan Emerging and Blackrock Midcap 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 Blackrock Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan Emerging and Blackrock Midcap.

Diversification Opportunities for Jpmorgan Emerging and Blackrock Midcap

0.07

Correlation Coefficient

Jpmorgan Emerging  Blackrock Midcap

Significant diversification

The 3 months correlation between JPMORGAN and Blackrock is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Emerging Markets and Blackrock Midcap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Midcap Index 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 Blackrock Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Midcap Index has no effect on the direction of Jpmorgan Emerging i.e., Jpmorgan Emerging and Blackrock Midcap go up and down completely randomly.

Pair Corralation between Jpmorgan Emerging and Blackrock Midcap

Assuming the 90 days horizon Jpmorgan Emerging is expected to generate 25.04 times less return on investment than Blackrock Midcap. In addition to that, Jpmorgan Emerging is 1.19 times more volatile than Blackrock Midcap Index. It trades about 0.01 of its total potential returns per unit of risk. Blackrock Midcap Index is currently generating about 0.26 per unit of volatility. If you would invest  1,488  in Blackrock Midcap Index on September 3, 2024 and sell it today you would earn a total of  187.00  from holding Blackrock Midcap Index or generate 12.57% return on investment over 90 days.

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

Jpmorgan Emerging Markets  vs.  Blackrock Midcap Index

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.

Blackrock Midcap Index

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Midcap Index are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Blackrock Midcap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Jpmorgan Emerging and Blackrock Midcap

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

The idea behind Jpmorgan Emerging Markets and Blackrock Midcap Index 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.