Correlation Between Jpmorgan Small and Jpmorgan Mid

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

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

Diversification Opportunities for Jpmorgan Small and Jpmorgan Mid

0.94

Correlation Coefficient

Jpmorgan Small  Jpmorgan Mid

Almost no diversification

The 3 months correlation between Jpmorgan and Jpmorgan is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Small Cap and Jpmorgan Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Mid Cap and Jpmorgan Small 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 Small Cap are associated (or correlated) with Jpmorgan Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Mid Cap has no effect on the direction of Jpmorgan Small i.e., Jpmorgan Small and Jpmorgan Mid go up and down completely randomly.

Pair Corralation between Jpmorgan Small and Jpmorgan Mid

Assuming the 90 days horizon Jpmorgan Small is expected to generate 1.11 times less return on investment than Jpmorgan Mid. In addition to that, Jpmorgan Small is 1.53 times more volatile than Jpmorgan Mid Cap. It trades about 0.06 of its total potential returns per unit of risk. Jpmorgan Mid Cap is currently generating about 0.1 per unit of volatility. If you would invest  5,131  in Jpmorgan Mid Cap on August 31, 2024 and sell it today you would earn a total of  1,782  from holding Jpmorgan Mid Cap or generate 34.73% return on investment over 90 days.

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

Jpmorgan Small Cap  vs.  Jpmorgan Mid Cap

Jpmorgan Small Cap

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Small Cap are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Jpmorgan Small may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Jpmorgan Mid Cap

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Mid Cap are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Jpmorgan Mid may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Jpmorgan Small and Jpmorgan Mid

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

The idea behind Jpmorgan Small Cap and Jpmorgan Mid Cap 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.