Correlation Between JPM America and JPMIF Bond

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

Diversification Opportunities for JPM America and JPMIF Bond

0.89

Correlation Coefficient

JPM America  JPMIF Bond

Very poor diversification

The 3 months correlation between JPM and JPMIF is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding JPM America Equity and JPMIF Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMIF Bond Fund 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 JPMIF Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMIF Bond Fund has no effect on the direction of JPM America i.e., JPM America and JPMIF Bond go up and down completely randomly.

Pair Corralation between JPM America and JPMIF Bond

Assuming the 90 days trading horizon JPM America Equity is expected to generate 2.93 times more return on investment than JPMIF Bond. However, JPM America is 2.93 times more volatile than JPMIF Bond Fund. It trades about 0.08 of its potential returns per unit of risk. JPMIF Bond Fund is currently generating about 0.09 per unit of risk. If you would invest  39,342  in JPM America Equity on October 4, 2024 and sell it today you would earn a total of  4,268  from holding JPM America Equity or generate 10.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.19%
Values	Daily Returns

JPM America Equity  vs.  JPMIF Bond Fund

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.

JPMIF Bond Fund

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JPMIF Bond Fund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, JPMIF Bond is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with JPM America and JPMIF Bond

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

The idea behind JPM America Equity and JPMIF Bond Fund 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.