Correlation Between JPM America and Swedbank Robur

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

Diversification Opportunities for JPM America and Swedbank Robur

0.82

Correlation Coefficient

JPM America  Swedbank Robur

Very poor diversification

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

Pair Corralation between JPM America and Swedbank Robur

Assuming the 90 days trading horizon JPM America Equity is expected to generate 6.78 times more return on investment than Swedbank Robur. However, JPM America is 6.78 times more volatile than Swedbank Robur Corporate. It trades about 0.18 of its potential returns per unit of risk. Swedbank Robur Corporate is currently generating about 0.12 per unit of risk. If you would invest  39,619  in JPM America Equity on October 8, 2024 and sell it today you would earn a total of  4,772  from holding JPM America Equity or generate 12.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	96.67%
Values	Daily Returns

JPM America Equity  vs.  Swedbank Robur Corporate

JPM America Equity

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPM America Equity are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather unsteady technical and fundamental indicators, JPM America exhibited solid returns over the last few months and may actually be approaching a breakup point.

Swedbank Robur Corporate

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Swedbank Robur Corporate are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Swedbank Robur is not utilizing all of its potentials. The new stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with JPM America and Swedbank Robur

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

The idea behind JPM America Equity and Swedbank Robur 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.