Correlation Between JPM Research and JPM Global

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

By analyzing existing cross correlation between JPM Research Enhanced and JPM Global Research, you can compare the effects of market volatilities on JPM Research and JPM Global 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 JPM Research with a short position of JPM Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPM Research and JPM Global.

Diversification Opportunities for JPM Research and JPM Global

0.98

Correlation Coefficient

JPM Research  JPM Global

Almost no diversification

The 3 months correlation between JPM and JPM is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding JPM Research Enhanced and JPM Global Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM Global Research and JPM Research 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 JPM Research Enhanced are associated (or correlated) with JPM Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM Global Research has no effect on the direction of JPM Research i.e., JPM Research and JPM Global go up and down completely randomly.

Pair Corralation between JPM Research and JPM Global

Assuming the 90 days trading horizon JPM Research Enhanced is expected to generate 1.09 times more return on investment than JPM Global. However, JPM Research is 1.09 times more volatile than JPM Global Research. It trades about 0.12 of its potential returns per unit of risk. JPM Global Research is currently generating about 0.1 per unit of risk. If you would invest  262,900  in JPM Research Enhanced on October 9, 2024 and sell it today you would earn a total of  7,875  from holding JPM Research Enhanced or generate 3.0% return on investment over 90 days.

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

JPM Research Enhanced  vs.  JPM Global Research

JPM Research Enhanced

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPM Research Enhanced are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, JPM Research may actually be approaching a critical reversion point that can send shares even higher in February 2025.

JPM Global Research

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPM Global Research are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, JPM Global is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with JPM Research and JPM Global

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

The idea behind JPM Research Enhanced and JPM Global Research 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.

Check out your portfolio center.

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.