Correlation Between JPMorgan International and Invesco International

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

By analyzing existing cross correlation between JPMorgan International Bond and Invesco International Corporate, you can compare the effects of market volatilities on JPMorgan International and Invesco International 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 International with a short position of Invesco International. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan International and Invesco International.

Diversification Opportunities for JPMorgan International and Invesco International

0.74

Correlation Coefficient

JPMorgan International  Invesco International

Poor diversification

The 3 months correlation between JPMorgan and Invesco is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan International Bond and Invesco International Corporat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco International and JPMorgan International 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 International Bond are associated (or correlated) with Invesco International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco International has no effect on the direction of JPMorgan International i.e., JPMorgan International and Invesco International go up and down completely randomly.

Pair Corralation between JPMorgan International and Invesco International

Given the investment horizon of 90 days JPMorgan International Bond is expected to generate 0.38 times more return on investment than Invesco International. However, JPMorgan International Bond is 2.66 times less risky than Invesco International. It trades about 0.12 of its potential returns per unit of risk. Invesco International Corporate is currently generating about -0.03 per unit of risk. If you would invest  4,761  in JPMorgan International Bond on December 4, 2024 and sell it today you would earn a total of  65.00  from holding JPMorgan International Bond or generate 1.37% return on investment over 90 days.

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

JPMorgan International Bond  vs.  Invesco International Corporat

JPMorgan International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan International Bond are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, JPMorgan International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Invesco International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco International Corporate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Invesco International is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JPMorgan International and Invesco International

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

The idea behind JPMorgan International Bond and Invesco International Corporate 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.