Correlation Between Jpmorgan Large and Hotchkis Wiley

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

Diversification Opportunities for Jpmorgan Large and Hotchkis Wiley

0.92

Correlation Coefficient

Jpmorgan Large  Hotchkis Wiley

Almost no diversification

The 3 months correlation between Jpmorgan and Hotchkis is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Large Cap and Hotchkis Wiley Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotchkis Wiley Small 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 Hotchkis Wiley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotchkis Wiley Small has no effect on the direction of Jpmorgan Large i.e., Jpmorgan Large and Hotchkis Wiley go up and down completely randomly.

Pair Corralation between Jpmorgan Large and Hotchkis Wiley

Assuming the 90 days horizon Jpmorgan Large Cap is expected to generate 0.74 times more return on investment than Hotchkis Wiley. However, Jpmorgan Large Cap is 1.34 times less risky than Hotchkis Wiley. It trades about -0.02 of its potential returns per unit of risk. Hotchkis Wiley Small is currently generating about -0.09 per unit of risk. If you would invest  1,989  in Jpmorgan Large Cap on December 30, 2024 and sell it today you would lose (24.00) from holding Jpmorgan Large Cap or give up 1.21% of portfolio value over 90 days.

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

Jpmorgan Large Cap  vs.  Hotchkis Wiley Small

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 fairly strong basic indicators, Jpmorgan Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hotchkis Wiley Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hotchkis Wiley Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental 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 Hotchkis Wiley

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

The idea behind Jpmorgan Large Cap and Hotchkis Wiley Small 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.