Correlation Between T Rex and JPMorgan Value

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

By analyzing existing cross correlation between T Rex 2X Long and JPMorgan Value Factor, you can compare the effects of market volatilities on T Rex and JPMorgan Value 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 T Rex with a short position of JPMorgan Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rex and JPMorgan Value.

Diversification Opportunities for T Rex and JPMorgan Value

0.04

Correlation Coefficient

T Rex  JPMorgan Value

Significant diversification

The 3 months correlation between NVDX and JPMorgan is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding T Rex 2X Long and JPMorgan Value Factor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Value Factor and T Rex 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 T Rex 2X Long are associated (or correlated) with JPMorgan Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Value Factor has no effect on the direction of T Rex i.e., T Rex and JPMorgan Value go up and down completely randomly.

Pair Corralation between T Rex and JPMorgan Value

Given the investment horizon of 90 days T Rex 2X Long is expected to under-perform the JPMorgan Value. In addition to that, T Rex is 9.45 times more volatile than JPMorgan Value Factor. It trades about -0.04 of its total potential returns per unit of risk. JPMorgan Value Factor is currently generating about -0.07 per unit of volatility. If you would invest  4,539  in JPMorgan Value Factor on December 1, 2024 and sell it today you would lose (149.00) from holding JPMorgan Value Factor or give up 3.28% of portfolio value over 90 days.

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

T Rex 2X Long  vs.  JPMorgan Value Factor

T Rex 2X

Risk-Adjusted Performance

Very Weak

Over the last 90 days T Rex 2X Long has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

JPMorgan Value Factor

Risk-Adjusted Performance

Very Weak

Over the last 90 days JPMorgan Value Factor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, JPMorgan Value is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with T Rex and JPMorgan Value

The main advantage of trading using opposite T Rex and JPMorgan Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rex position performs unexpectedly, JPMorgan Value 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 Value will offset losses from the drop in JPMorgan Value's long position.

The idea behind T Rex 2X Long and JPMorgan Value Factor 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.