Correlation Between Jpmorgan and The Hartford

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

By analyzing existing cross correlation between Jpmorgan Equity Fund and The Hartford Balanced, you can compare the effects of market volatilities on Jpmorgan and The Hartford 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 with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan and The Hartford.

Diversification Opportunities for Jpmorgan and The Hartford

0.74

Correlation Coefficient

Jpmorgan  The Hartford

Poor diversification

The 3 months correlation between Jpmorgan and The is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Equity Fund and The Hartford Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Balanced and Jpmorgan 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 Equity Fund are associated (or correlated) with The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Balanced has no effect on the direction of Jpmorgan i.e., Jpmorgan and The Hartford go up and down completely randomly.

Pair Corralation between Jpmorgan and The Hartford

Assuming the 90 days horizon Jpmorgan Equity Fund is expected to generate 1.92 times more return on investment than The Hartford. However, Jpmorgan is 1.92 times more volatile than The Hartford Balanced. It trades about -0.04 of its potential returns per unit of risk. The Hartford Balanced is currently generating about -0.16 per unit of risk. If you would invest  2,543  in Jpmorgan Equity Fund on October 8, 2024 and sell it today you would lose (77.00) from holding Jpmorgan Equity Fund or give up 3.03% of portfolio value over 90 days.

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

Jpmorgan Equity Fund  vs.  The Hartford Balanced

Jpmorgan Equity

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hartford Balanced

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Jpmorgan and The Hartford

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

The idea behind Jpmorgan Equity Fund and The Hartford Balanced 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.