Correlation Between JPMorgan Ultra and SPDR Portfolio

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

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

Diversification Opportunities for JPMorgan Ultra and SPDR Portfolio

-0.44

Correlation Coefficient

JPMorgan Ultra  SPDR Portfolio

Very good diversification

The 3 months correlation between JPMorgan and SPDR is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Ultra Short Income and SPDR Portfolio Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio Corporate and JPMorgan Ultra 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 Ultra Short Income are associated (or correlated) with SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio Corporate has no effect on the direction of JPMorgan Ultra i.e., JPMorgan Ultra and SPDR Portfolio go up and down completely randomly.

Pair Corralation between JPMorgan Ultra and SPDR Portfolio

Given the investment horizon of 90 days JPMorgan Ultra Short Income is expected to generate 0.08 times more return on investment than SPDR Portfolio. However, JPMorgan Ultra Short Income is 12.77 times less risky than SPDR Portfolio. It trades about 0.86 of its potential returns per unit of risk. SPDR Portfolio Corporate is currently generating about 0.03 per unit of risk. If you would invest  5,029  in JPMorgan Ultra Short Income on October 22, 2024 and sell it today you would earn a total of  20.00  from holding JPMorgan Ultra Short Income or generate 0.4% return on investment over 90 days.

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

JPMorgan Ultra Short Income  vs.  SPDR Portfolio Corporate

JPMorgan Ultra Short

Risk-Adjusted Performance

41 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Ultra Short Income are ranked lower than 41 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, JPMorgan Ultra is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

SPDR Portfolio Corporate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR Portfolio Corporate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, SPDR Portfolio is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with JPMorgan Ultra and SPDR Portfolio

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

The idea behind JPMorgan Ultra Short Income and SPDR Portfolio Corporate 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.