Correlation Between JPMorgan Fundamental and Alpha Architect

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

By analyzing existing cross correlation between JPMorgan Fundamental Data and Alpha Architect International, you can compare the effects of market volatilities on JPMorgan Fundamental and Alpha Architect 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 Fundamental with a short position of Alpha Architect. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Fundamental and Alpha Architect.

Diversification Opportunities for JPMorgan Fundamental and Alpha Architect

-0.58

Correlation Coefficient

JPMorgan Fundamental  Alpha Architect

Excellent diversification

The 3 months correlation between JPMorgan and Alpha is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Fundamental Data and Alpha Architect International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Architect Inte and JPMorgan Fundamental 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 Fundamental Data are associated (or correlated) with Alpha Architect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Architect Inte has no effect on the direction of JPMorgan Fundamental i.e., JPMorgan Fundamental and Alpha Architect go up and down completely randomly.

Pair Corralation between JPMorgan Fundamental and Alpha Architect

Given the investment horizon of 90 days JPMorgan Fundamental Data is expected to under-perform the Alpha Architect. In addition to that, JPMorgan Fundamental is 1.25 times more volatile than Alpha Architect International. It trades about -0.08 of its total potential returns per unit of risk. Alpha Architect International is currently generating about 0.18 per unit of volatility. If you would invest  2,403  in Alpha Architect International on December 26, 2024 and sell it today you would earn a total of  220.00  from holding Alpha Architect International or generate 9.16% return on investment over 90 days.

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

JPMorgan Fundamental Data  vs.  Alpha Architect International

JPMorgan Fundamental Data

Risk-Adjusted Performance

Very Weak

Over the last 90 days JPMorgan Fundamental Data has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, JPMorgan Fundamental is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Alpha Architect Inte

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Architect International are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Alpha Architect may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with JPMorgan Fundamental and Alpha Architect

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

The idea behind JPMorgan Fundamental Data and Alpha Architect International 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.