Correlation Between Freedom Day and JP Morgan

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

By analyzing existing cross correlation between Freedom Day Dividend and JP Morgan Exchange Traded, you can compare the effects of market volatilities on Freedom Day and JP Morgan 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 Freedom Day with a short position of JP Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Day and JP Morgan.

Diversification Opportunities for Freedom Day and JP Morgan

-0.09

Correlation Coefficient

Freedom Day  JP Morgan

Good diversification

The 3 months correlation between Freedom and BLLD is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Day Dividend and JP Morgan Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JP Morgan Exchange and Freedom Day 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 Freedom Day Dividend are associated (or correlated) with JP Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JP Morgan Exchange has no effect on the direction of Freedom Day i.e., Freedom Day and JP Morgan go up and down completely randomly.

Pair Corralation between Freedom Day and JP Morgan

Given the investment horizon of 90 days Freedom Day is expected to generate 18.67 times less return on investment than JP Morgan. But when comparing it to its historical volatility, Freedom Day Dividend is 1.04 times less risky than JP Morgan. It trades about 0.01 of its potential returns per unit of risk. JP Morgan Exchange Traded is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4,643  in JP Morgan Exchange Traded on December 28, 2024 and sell it today you would earn a total of  234.00  from holding JP Morgan Exchange Traded or generate 5.04% return on investment over 90 days.

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

Freedom Day Dividend  vs.  JP Morgan Exchange Traded

Freedom Day Dividend

Risk-Adjusted Performance

Insignificant

Over the last 90 days Freedom Day Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Freedom Day is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

JP Morgan Exchange

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JP Morgan Exchange Traded are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, JP Morgan is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Freedom Day and JP Morgan

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

The idea behind Freedom Day Dividend and JP Morgan Exchange Traded 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.