Correlation Between JPMorgan Diversified and FlexShares International

Can any of the company-specific risk be diversified away by investing in both JPMorgan Diversified and FlexShares International 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 JPMorgan Diversified and FlexShares International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JPMorgan Diversified Return and FlexShares International Quality, you can compare the effects of market volatilities on JPMorgan Diversified and FlexShares International 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 JPMorgan Diversified with a short position of FlexShares International. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Diversified and FlexShares International.

Diversification Opportunities for JPMorgan Diversified and FlexShares International

-0.27

Correlation Coefficient

JPMorgan Diversified  FlexShares International

Very good diversification

The 3 months correlation between JPMorgan and FlexShares is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Diversified Return and FlexShares International Quali in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares International and JPMorgan Diversified 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 JPMorgan Diversified Return are associated (or correlated) with FlexShares International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares International has no effect on the direction of JPMorgan Diversified i.e., JPMorgan Diversified and FlexShares International go up and down completely randomly.

Pair Corralation between JPMorgan Diversified and FlexShares International

Given the investment horizon of 90 days JPMorgan Diversified Return is expected to under-perform the FlexShares International. But the etf apears to be less risky and, when comparing its historical volatility, JPMorgan Diversified Return is 1.04 times less risky than FlexShares International. The etf trades about -0.06 of its potential returns per unit of risk. The FlexShares International Quality is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,744  in FlexShares International Quality on December 24, 2024 and sell it today you would earn a total of  209.00  from holding FlexShares International Quality or generate 7.62% return on investment over 90 days.

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

JPMorgan Diversified Return  vs.  FlexShares International Quali

JPMorgan Diversified

Risk-Adjusted Performance

Very Weak

Over the last 90 days JPMorgan Diversified Return has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, JPMorgan Diversified is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

FlexShares International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FlexShares International Quality are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, FlexShares International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with JPMorgan Diversified and FlexShares International

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

The idea behind JPMorgan Diversified Return and FlexShares International Quality 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.