Correlation Between Jpmorgan Diversified and The Arbitrage

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

By analyzing existing cross correlation between Jpmorgan Diversified Fund and The Arbitrage Event Driven, you can compare the effects of market volatilities on Jpmorgan Diversified and The Arbitrage 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 Diversified with a short position of The Arbitrage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan Diversified and The Arbitrage.

Diversification Opportunities for Jpmorgan Diversified and The Arbitrage

0.43

Correlation Coefficient

Jpmorgan Diversified  The Arbitrage

Very weak diversification

The 3 months correlation between Jpmorgan and The is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Diversified Fund and The Arbitrage Event Driven in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbitrage Event and Jpmorgan Diversified 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 Diversified Fund are associated (or correlated) with The Arbitrage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbitrage Event has no effect on the direction of Jpmorgan Diversified i.e., Jpmorgan Diversified and The Arbitrage go up and down completely randomly.

Pair Corralation between Jpmorgan Diversified and The Arbitrage

Assuming the 90 days horizon Jpmorgan Diversified is expected to generate 11.1 times less return on investment than The Arbitrage. In addition to that, Jpmorgan Diversified is 3.79 times more volatile than The Arbitrage Event Driven. It trades about 0.01 of its total potential returns per unit of risk. The Arbitrage Event Driven is currently generating about 0.27 per unit of volatility. If you would invest  1,185  in The Arbitrage Event Driven on December 30, 2024 and sell it today you would earn a total of  33.00  from holding The Arbitrage Event Driven or generate 2.78% return on investment over 90 days.

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

Jpmorgan Diversified Fund  vs.  The Arbitrage Event Driven

Jpmorgan Diversified

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jpmorgan Diversified Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Jpmorgan Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Arbitrage Event

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Arbitrage Event Driven are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, The Arbitrage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jpmorgan Diversified and The Arbitrage

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

The idea behind Jpmorgan Diversified Fund and The Arbitrage Event Driven 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.