Correlation Between JPM America and JPM Global

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

Diversification Opportunities for JPM America and JPM Global

-0.33

Correlation Coefficient

JPM America  JPM Global

Very good diversification

The 3 months correlation between JPM and JPM is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding JPM America Equity and JPM Global Natural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM Global Natural 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 JPM Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM Global Natural has no effect on the direction of JPM America i.e., JPM America and JPM Global go up and down completely randomly.

Pair Corralation between JPM America and JPM Global

Assuming the 90 days trading horizon JPM America Equity is expected to generate 0.81 times more return on investment than JPM Global. However, JPM America Equity is 1.24 times less risky than JPM Global. It trades about 0.19 of its potential returns per unit of risk. JPM Global Natural is currently generating about -0.13 per unit of risk. If you would invest  41,558  in JPM America Equity on October 7, 2024 and sell it today you would earn a total of  2,554  from holding JPM America Equity or generate 6.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

JPM America Equity  vs.  JPM Global Natural

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 unfluctuating technical and fundamental indicators, JPM America may actually be approaching a critical reversion point that can send shares even higher in February 2025.

JPM Global Natural

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPM Global Natural has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with JPM America and JPM Global

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

The idea behind JPM America Equity and JPM Global Natural 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.