Correlation Between JPM America and Naranja Standard

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

By analyzing existing cross correlation between JPM America Equity and Naranja Standard Poors, you can compare the effects of market volatilities on JPM America and Naranja Standard 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 JPM America with a short position of Naranja Standard. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPM America and Naranja Standard.

Diversification Opportunities for JPM America and Naranja Standard

0.54

Correlation Coefficient

JPM America  Naranja Standard

Very weak diversification

The 3 months correlation between JPM and Naranja is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding JPM America Equity and Naranja Standard Poors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naranja Standard Poors and JPM America 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 JPM America Equity are associated (or correlated) with Naranja Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naranja Standard Poors has no effect on the direction of JPM America i.e., JPM America and Naranja Standard go up and down completely randomly.

Pair Corralation between JPM America and Naranja Standard

Assuming the 90 days trading horizon JPM America Equity is expected to generate 1.14 times more return on investment than Naranja Standard. However, JPM America is 1.14 times more volatile than Naranja Standard Poors. It trades about -0.02 of its potential returns per unit of risk. Naranja Standard Poors is currently generating about -0.11 per unit of risk. If you would invest  44,304  in JPM America Equity on October 6, 2024 and sell it today you would lose (192.00) from holding JPM America Equity or give up 0.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.12%
Values	Daily Returns

JPM America Equity  vs.  Naranja Standard Poors

JPM America Equity

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPM America Equity are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather weak technical and fundamental indicators, JPM America may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Naranja Standard Poors

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Naranja Standard Poors has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat fragile basic indicators, Naranja Standard may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with JPM America and Naranja Standard

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

The idea behind JPM America Equity and Naranja Standard Poors 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.