Correlation Between JPMorgan Realty and Matthews Emerging

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

By analyzing existing cross correlation between JPMorgan Realty Income and Matthews Emerging Markets, you can compare the effects of market volatilities on JPMorgan Realty and Matthews Emerging 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 Realty with a short position of Matthews Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Realty and Matthews Emerging.

Diversification Opportunities for JPMorgan Realty and Matthews Emerging

0.61

Correlation Coefficient

JPMorgan Realty  Matthews Emerging

Poor diversification

The 3 months correlation between JPMorgan and Matthews is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Realty Income and Matthews Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Emerging Markets and JPMorgan Realty 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 Realty Income are associated (or correlated) with Matthews Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Emerging Markets has no effect on the direction of JPMorgan Realty i.e., JPMorgan Realty and Matthews Emerging go up and down completely randomly.

Pair Corralation between JPMorgan Realty and Matthews Emerging

Given the investment horizon of 90 days JPMorgan Realty Income is expected to under-perform the Matthews Emerging. In addition to that, JPMorgan Realty is 1.33 times more volatile than Matthews Emerging Markets. It trades about -0.34 of its total potential returns per unit of risk. Matthews Emerging Markets is currently generating about -0.05 per unit of volatility. If you would invest  2,978  in Matthews Emerging Markets on October 10, 2024 and sell it today you would lose (29.00) from holding Matthews Emerging Markets or give up 0.97% of portfolio value over 90 days.

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

JPMorgan Realty Income  vs.  Matthews Emerging Markets

JPMorgan Realty Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Matthews Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Matthews Emerging Markets has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Matthews Emerging is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JPMorgan Realty and Matthews Emerging

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

The idea behind JPMorgan Realty Income and Matthews Emerging Markets 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.