Correlation Between JPMorgan Diversified and SPDR MSCI

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

Diversification Opportunities for JPMorgan Diversified and SPDR MSCI

0.35

Correlation Coefficient

JPMorgan Diversified  SPDR MSCI

Weak diversification

The 3 months correlation between JPMorgan and SPDR is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Diversified Return and SPDR MSCI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR MSCI Emerging 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 SPDR MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR MSCI Emerging has no effect on the direction of JPMorgan Diversified i.e., JPMorgan Diversified and SPDR MSCI go up and down completely randomly.

Pair Corralation between JPMorgan Diversified and SPDR MSCI

Given the investment horizon of 90 days JPMorgan Diversified Return is expected to under-perform the SPDR MSCI. But the etf apears to be less risky and, when comparing its historical volatility, JPMorgan Diversified Return is 1.05 times less risky than SPDR MSCI. The etf trades about -0.01 of its potential returns per unit of risk. The SPDR MSCI Emerging is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  5,789  in SPDR MSCI Emerging on December 26, 2024 and sell it today you would earn a total of  74.00  from holding SPDR MSCI Emerging or generate 1.28% return on investment over 90 days.

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

JPMorgan Diversified Return  vs.  SPDR MSCI Emerging

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 comparatively stable basic indicators, JPMorgan Diversified is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

SPDR MSCI Emerging

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR MSCI Emerging are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, SPDR MSCI 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 Diversified and SPDR MSCI

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

The idea behind JPMorgan Diversified Return and SPDR MSCI Emerging 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.