Correlation Between JPMorgan Quality and JPMorgan Market

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

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

Diversification Opportunities for JPMorgan Quality and JPMorgan Market

0.42

Correlation Coefficient

JPMorgan Quality  JPMorgan Market

Very weak diversification

The 3 months correlation between JPMorgan and JPMorgan is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Quality Factor and JPMorgan Market Expansion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Market Expansion and JPMorgan Quality 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 Quality Factor are associated (or correlated) with JPMorgan Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Market Expansion has no effect on the direction of JPMorgan Quality i.e., JPMorgan Quality and JPMorgan Market go up and down completely randomly.

Pair Corralation between JPMorgan Quality and JPMorgan Market

Given the investment horizon of 90 days JPMorgan Quality Factor is expected to generate 0.73 times more return on investment than JPMorgan Market. However, JPMorgan Quality Factor is 1.37 times less risky than JPMorgan Market. It trades about -0.06 of its potential returns per unit of risk. JPMorgan Market Expansion is currently generating about -0.32 per unit of risk. If you would invest  5,992  in JPMorgan Quality Factor on December 1, 2024 and sell it today you would lose (55.00) from holding JPMorgan Quality Factor or give up 0.92% of portfolio value over 90 days.

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

JPMorgan Quality Factor  vs.  JPMorgan Market Expansion

JPMorgan Quality Factor

Risk-Adjusted Performance

Very Weak

Over the last 90 days JPMorgan Quality Factor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, JPMorgan Quality is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

JPMorgan Market Expansion

Risk-Adjusted Performance

Very Weak

Over the last 90 days JPMorgan Market Expansion has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf'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 JPMorgan Quality and JPMorgan Market

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

The idea behind JPMorgan Quality Factor and JPMorgan Market Expansion 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.