Correlation Between MAYBANK EMERGING and JP Morgan

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

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

Diversification Opportunities for MAYBANK EMERGING and JP Morgan

0.83

Correlation Coefficient

MAYBANK EMERGING  JP Morgan

Very poor diversification

The 3 months correlation between MAYBANK and JIRE is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding MAYBANK EMERGING ETF 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 MAYBANK EMERGING 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 MAYBANK EMERGING ETF 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 MAYBANK EMERGING i.e., MAYBANK EMERGING and JP Morgan go up and down completely randomly.

Pair Corralation between MAYBANK EMERGING and JP Morgan

Considering the 90-day investment horizon MAYBANK EMERGING ETF is expected to under-perform the JP Morgan. In addition to that, MAYBANK EMERGING is 1.05 times more volatile than JP Morgan Exchange Traded. It trades about -0.08 of its total potential returns per unit of risk. JP Morgan Exchange Traded is currently generating about -0.03 per unit of volatility. If you would invest  6,157  in JP Morgan Exchange Traded on October 24, 2024 and sell it today you would lose (97.00) from holding JP Morgan Exchange Traded or give up 1.58% of portfolio value over 90 days.

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

MAYBANK EMERGING ETF  vs.  JP Morgan Exchange Traded

MAYBANK EMERGING ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MAYBANK EMERGING ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, MAYBANK EMERGING is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

JP Morgan Exchange

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JP Morgan Exchange Traded has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, JP Morgan is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with MAYBANK EMERGING and JP Morgan

The main advantage of trading using opposite MAYBANK EMERGING and JP Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAYBANK EMERGING 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 MAYBANK EMERGING ETF 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.