Correlation Between Formidable Fortress and JPMorgan Active

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

By analyzing existing cross correlation between Formidable Fortress ETF and JPMorgan Active Value, you can compare the effects of market volatilities on Formidable Fortress and JPMorgan Active 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 Formidable Fortress with a short position of JPMorgan Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formidable Fortress and JPMorgan Active.

Diversification Opportunities for Formidable Fortress and JPMorgan Active

0.97

Correlation Coefficient

Formidable Fortress  JPMorgan Active

Almost no diversification

The 3 months correlation between Formidable and JPMorgan is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Formidable Fortress ETF and JPMorgan Active Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Active Value and Formidable Fortress 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 Formidable Fortress ETF are associated (or correlated) with JPMorgan Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Active Value has no effect on the direction of Formidable Fortress i.e., Formidable Fortress and JPMorgan Active go up and down completely randomly.

Pair Corralation between Formidable Fortress and JPMorgan Active

Given the investment horizon of 90 days Formidable Fortress ETF is expected to generate 0.95 times more return on investment than JPMorgan Active. However, Formidable Fortress ETF is 1.05 times less risky than JPMorgan Active. It trades about -0.21 of its potential returns per unit of risk. JPMorgan Active Value is currently generating about -0.28 per unit of risk. If you would invest  2,994  in Formidable Fortress ETF on September 20, 2024 and sell it today you would lose (96.00) from holding Formidable Fortress ETF or give up 3.21% of portfolio value over 90 days.

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

Formidable Fortress ETF  vs.  JPMorgan Active Value

Formidable Fortress ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Formidable Fortress ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Formidable Fortress is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

JPMorgan Active Value

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Formidable Fortress and JPMorgan Active

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

The idea behind Formidable Fortress ETF and JPMorgan Active Value 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.