Correlation Between JPMorgan Momentum and Tidal ETF

Can any of the company-specific risk be diversified away by investing in both JPMorgan Momentum and Tidal ETF 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 Momentum and Tidal ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JPMorgan Momentum Factor and Tidal ETF Trust, you can compare the effects of market volatilities on JPMorgan Momentum and Tidal ETF 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 Momentum with a short position of Tidal ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Momentum and Tidal ETF.

Diversification Opportunities for JPMorgan Momentum and Tidal ETF

0.82

Correlation Coefficient

JPMorgan Momentum  Tidal ETF

Very poor diversification

The 3 months correlation between JPMorgan and Tidal is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Momentum Factor and Tidal ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal ETF Trust and JPMorgan Momentum 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 Momentum Factor are associated (or correlated) with Tidal ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal ETF Trust has no effect on the direction of JPMorgan Momentum i.e., JPMorgan Momentum and Tidal ETF go up and down completely randomly.

Pair Corralation between JPMorgan Momentum and Tidal ETF

Given the investment horizon of 90 days JPMorgan Momentum Factor is expected to generate 1.39 times more return on investment than Tidal ETF. However, JPMorgan Momentum is 1.39 times more volatile than Tidal ETF Trust. It trades about -0.14 of its potential returns per unit of risk. Tidal ETF Trust is currently generating about -0.26 per unit of risk. If you would invest  6,108  in JPMorgan Momentum Factor on October 12, 2024 and sell it today you would lose (189.00) from holding JPMorgan Momentum Factor or give up 3.09% of portfolio value over 90 days.

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

JPMorgan Momentum Factor  vs.  Tidal ETF Trust

JPMorgan Momentum Factor

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Momentum Factor are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, JPMorgan Momentum is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Tidal ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tidal ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Tidal ETF is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with JPMorgan Momentum and Tidal ETF

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

The idea behind JPMorgan Momentum Factor and Tidal ETF Trust 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.