Correlation Between JPM America and Groupama Entreprises

Can any of the company-specific risk be diversified away by investing in both JPM America and Groupama Entreprises 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 Groupama Entreprises 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 Groupama Entreprises N, you can compare the effects of market volatilities on JPM America and Groupama Entreprises 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 Groupama Entreprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPM America and Groupama Entreprises.

Diversification Opportunities for JPM America and Groupama Entreprises

0.94

Correlation Coefficient

JPM America  Groupama Entreprises

Almost no diversification

The 3 months correlation between JPM and Groupama is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding JPM America Equity and Groupama Entreprises N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupama Entreprises 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 Groupama Entreprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupama Entreprises has no effect on the direction of JPM America i.e., JPM America and Groupama Entreprises go up and down completely randomly.

Pair Corralation between JPM America and Groupama Entreprises

Assuming the 90 days trading horizon JPM America Equity is expected to under-perform the Groupama Entreprises. In addition to that, JPM America is 61.13 times more volatile than Groupama Entreprises N. It trades about -0.1 of its total potential returns per unit of risk. Groupama Entreprises N is currently generating about 1.02 per unit of volatility. If you would invest  59,259  in Groupama Entreprises N on September 23, 2024 and sell it today you would earn a total of  142.00  from holding Groupama Entreprises N or generate 0.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

JPM America Equity  vs.  Groupama Entreprises N

JPM America Equity

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPM America Equity are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather unsteady technical and fundamental indicators, JPM America may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Groupama Entreprises

Risk-Adjusted Performance

78 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Groupama Entreprises N are ranked lower than 78 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Groupama Entreprises is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JPM America and Groupama Entreprises

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

The idea behind JPM America Equity and Groupama Entreprises N 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.