Correlation Between Jpmorgan Equity and Payden Floating

Can any of the company-specific risk be diversified away by investing in both Jpmorgan Equity and Payden Floating 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 Equity and Payden Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jpmorgan Equity Index and Payden Floating Rate, you can compare the effects of market volatilities on Jpmorgan Equity and Payden Floating 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 Equity with a short position of Payden Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan Equity and Payden Floating.

Diversification Opportunities for Jpmorgan Equity and Payden Floating

0.83

Correlation Coefficient

Jpmorgan Equity  Payden Floating

Very poor diversification

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

Pair Corralation between Jpmorgan Equity and Payden Floating

Assuming the 90 days horizon Jpmorgan Equity Index is expected to generate 9.59 times more return on investment than Payden Floating. However, Jpmorgan Equity is 9.59 times more volatile than Payden Floating Rate. It trades about 0.09 of its potential returns per unit of risk. Payden Floating Rate is currently generating about 0.29 per unit of risk. If you would invest  8,183  in Jpmorgan Equity Index on September 29, 2024 and sell it today you would earn a total of  860.00  from holding Jpmorgan Equity Index or generate 10.51% return on investment over 90 days.

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

Jpmorgan Equity Index  vs.  Payden Floating Rate

Jpmorgan Equity Index

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Equity Index are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Jpmorgan Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Payden Floating Rate

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Payden Floating Rate are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Payden Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jpmorgan Equity and Payden Floating

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

The idea behind Jpmorgan Equity Index and Payden Floating Rate 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 Commodity Directory module to find actively traded commodities issued by global exchanges.