Correlation Between Jpmorgan Large and Oil Gas

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

By analyzing existing cross correlation between Jpmorgan Large Cap and Oil Gas Ultrasector, you can compare the effects of market volatilities on Jpmorgan Large and Oil Gas 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 Large with a short position of Oil Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan Large and Oil Gas.

Diversification Opportunities for Jpmorgan Large and Oil Gas

0.73

Correlation Coefficient

Jpmorgan Large  Oil Gas

Poor diversification

The 3 months correlation between Jpmorgan and Oil is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Large Cap and Oil Gas Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Gas Ultrasector and Jpmorgan Large 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 Large Cap are associated (or correlated) with Oil Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Gas Ultrasector has no effect on the direction of Jpmorgan Large i.e., Jpmorgan Large and Oil Gas go up and down completely randomly.

Pair Corralation between Jpmorgan Large and Oil Gas

Assuming the 90 days horizon Jpmorgan Large Cap is expected to under-perform the Oil Gas. But the mutual fund apears to be less risky and, when comparing its historical volatility, Jpmorgan Large Cap is 3.04 times less risky than Oil Gas. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Oil Gas Ultrasector is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3,556  in Oil Gas Ultrasector on November 29, 2024 and sell it today you would lose (42.00) from holding Oil Gas Ultrasector or give up 1.18% of portfolio value over 90 days.

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

Jpmorgan Large Cap  vs.  Oil Gas Ultrasector

Jpmorgan Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jpmorgan Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Oil Gas Ultrasector

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oil Gas Ultrasector 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 Large and Oil Gas

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

The idea behind Jpmorgan Large Cap and Oil Gas Ultrasector 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.