Correlation Between JP Morgan and Matthews Asia

Can any of the company-specific risk be diversified away by investing in both JP Morgan and Matthews Asia 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 Asia 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 Asia Innovators, you can compare the effects of market volatilities on JP Morgan and Matthews Asia 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 Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of JP Morgan and Matthews Asia.

Diversification Opportunities for JP Morgan and Matthews Asia

0.7

Correlation Coefficient

JP Morgan  Matthews Asia

Poor diversification

The 3 months correlation between JIRE and Matthews is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding JP Morgan Exchange Traded and Matthews Asia Innovators in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Asia Innovators 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 Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Asia Innovators has no effect on the direction of JP Morgan i.e., JP Morgan and Matthews Asia go up and down completely randomly.

Pair Corralation between JP Morgan and Matthews Asia

Given the investment horizon of 90 days JP Morgan Exchange Traded is expected to generate 0.62 times more return on investment than Matthews Asia. However, JP Morgan Exchange Traded is 1.61 times less risky than Matthews Asia. It trades about 0.24 of its potential returns per unit of risk. Matthews Asia Innovators is currently generating about 0.06 per unit of risk. If you would invest  5,837  in JP Morgan Exchange Traded on December 19, 2024 and sell it today you would earn a total of  747.00  from holding JP Morgan Exchange Traded or generate 12.8% return on investment over 90 days.

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

JP Morgan Exchange Traded  vs.  Matthews Asia Innovators

JP Morgan Exchange

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JP Morgan Exchange Traded are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, JP Morgan exhibited solid returns over the last few months and may actually be approaching a breakup point.

Matthews Asia Innovators

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Matthews Asia Innovators are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Matthews Asia is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with JP Morgan and Matthews Asia

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

The idea behind JP Morgan Exchange Traded and Matthews Asia Innovators 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 CEOs Directory module to screen CEOs from public companies around the world.