Correlation Between Jp Morgan and First Eagle

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

By analyzing existing cross correlation between Jp Morgan Smartretirement and First Eagle Fund, you can compare the effects of market volatilities on Jp Morgan and First Eagle 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 Jp Morgan with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jp Morgan and First Eagle.

Diversification Opportunities for Jp Morgan and First Eagle

0.78

Correlation Coefficient

Jp Morgan  First Eagle

Poor diversification

The 3 months correlation between JTSQX and First is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Jp Morgan Smartretirement and First Eagle Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Fund and Jp Morgan 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 Jp Morgan Smartretirement are associated (or correlated) with First Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Eagle Fund has no effect on the direction of Jp Morgan i.e., Jp Morgan and First Eagle go up and down completely randomly.

Pair Corralation between Jp Morgan and First Eagle

Assuming the 90 days horizon Jp Morgan is expected to generate 8.43 times less return on investment than First Eagle. In addition to that, Jp Morgan is 1.03 times more volatile than First Eagle Fund. It trades about 0.01 of its total potential returns per unit of risk. First Eagle Fund is currently generating about 0.05 per unit of volatility. If you would invest  2,564  in First Eagle Fund on December 21, 2024 and sell it today you would earn a total of  56.00  from holding First Eagle Fund or generate 2.18% return on investment over 90 days.

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

Jp Morgan Smartretirement  vs.  First Eagle Fund

Jp Morgan Smartretirement

Risk-Adjusted Performance

Weak

Over the last 90 days Jp Morgan Smartretirement has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Jp Morgan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Eagle Fund

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Eagle Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, First Eagle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jp Morgan and First Eagle

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

The idea behind Jp Morgan Smartretirement and First Eagle Fund 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.