Correlation Between JPM America and Invesco Pan
Can any of the company-specific risk be diversified away by investing in both JPM America and Invesco Pan 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 Invesco Pan 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 Invesco Pan European, you can compare the effects of market volatilities on JPM America and Invesco Pan 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 Invesco Pan. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPM America and Invesco Pan.
Diversification Opportunities for JPM America and Invesco Pan
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between JPM and Invesco is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding JPM America Equity and Invesco Pan European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Pan European 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 Invesco Pan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Pan European has no effect on the direction of JPM America i.e., JPM America and Invesco Pan go up and down completely randomly.
Pair Corralation between JPM America and Invesco Pan
Assuming the 90 days trading horizon JPM America Equity is expected to generate 1.16 times more return on investment than Invesco Pan. However, JPM America is 1.16 times more volatile than Invesco Pan European. It trades about -0.02 of its potential returns per unit of risk. Invesco Pan European is currently generating about -0.13 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 Against |
Strength | Insignificant |
Accuracy | 94.44% |
Values | Daily Returns |
JPM America Equity vs. Invesco Pan European
Performance |
Timeline |
JPM America Equity |
Invesco Pan European |
JPM America and Invesco Pan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with JPM America and Invesco Pan
The main advantage of trading using opposite JPM America and Invesco Pan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPM America position performs unexpectedly, Invesco Pan 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 Pan will offset losses from the drop in Invesco Pan's long position.The idea behind JPM America Equity and Invesco Pan European 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.Invesco Pan vs. Azvalor Global Value | Invesco Pan vs. UBS Money Market | Invesco Pan vs. BlackRock Global Funds | Invesco Pan vs. Cobas Global PP |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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