Correlation Between JPMorgan Fundamental and Running Oak

Can any of the company-specific risk be diversified away by investing in both JPMorgan Fundamental and Running Oak 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 Running Oak 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 Running Oak Efficient, you can compare the effects of market volatilities on JPMorgan Fundamental and Running Oak 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 Running Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Fundamental and Running Oak.

Diversification Opportunities for JPMorgan Fundamental and Running Oak

0.83

Correlation Coefficient

JPMorgan Fundamental  Running Oak

Very poor diversification

The 3 months correlation between JPMorgan and Running is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Fundamental Data and Running Oak Efficient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Running Oak Efficient 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 Running Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Running Oak Efficient has no effect on the direction of JPMorgan Fundamental i.e., JPMorgan Fundamental and Running Oak go up and down completely randomly.

Pair Corralation between JPMorgan Fundamental and Running Oak

Given the investment horizon of 90 days JPMorgan Fundamental Data is expected to generate 1.11 times more return on investment than Running Oak. However, JPMorgan Fundamental is 1.11 times more volatile than Running Oak Efficient. It trades about -0.07 of its potential returns per unit of risk. Running Oak Efficient is currently generating about -0.11 per unit of risk. If you would invest  5,814  in JPMorgan Fundamental Data on December 2, 2024 and sell it today you would lose (214.00) from holding JPMorgan Fundamental Data or give up 3.68% of portfolio value over 90 days.

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

JPMorgan Fundamental Data  vs.  Running Oak Efficient

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Running Oak Efficient

Risk-Adjusted Performance

Very Weak

Over the last 90 days Running Oak Efficient has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Running Oak is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with JPMorgan Fundamental and Running Oak

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

The idea behind JPMorgan Fundamental Data and Running Oak Efficient 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.