Correlation Between JP Morgan and Matthews Emerging

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

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

Diversification Opportunities for JP Morgan and Matthews Emerging

0.86

Correlation Coefficient

JP Morgan  Matthews Emerging

Very poor diversification

The 3 months correlation between JIRE and Matthews is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding JP Morgan Exchange Traded and Matthews Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Emerging Markets and JP Morgan 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 JP Morgan Exchange Traded are associated (or correlated) with Matthews Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Emerging Markets has no effect on the direction of JP Morgan i.e., JP Morgan and Matthews Emerging go up and down completely randomly.

Pair Corralation between JP Morgan and Matthews Emerging

Given the investment horizon of 90 days JP Morgan Exchange Traded is expected to under-perform the Matthews Emerging. In addition to that, JP Morgan is 1.01 times more volatile than Matthews Emerging Markets. It trades about -0.35 of its total potential returns per unit of risk. Matthews Emerging Markets is currently generating about -0.05 per unit of volatility. If you would invest  2,978  in Matthews Emerging Markets on October 10, 2024 and sell it today you would lose (29.00) from holding Matthews Emerging Markets or give up 0.97% of portfolio value over 90 days.

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

JP Morgan Exchange Traded  vs.  Matthews Emerging Markets

JP Morgan Exchange

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JP Morgan Exchange Traded has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Matthews Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Matthews Emerging Markets has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Matthews Emerging is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JP Morgan and Matthews Emerging

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

The idea behind JP Morgan Exchange Traded and Matthews Emerging Markets 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..