Correlation Between Jpmorgan Small and Jpmorgan Growth

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

Diversification Opportunities for Jpmorgan Small and Jpmorgan Growth

0.85

Correlation Coefficient

Jpmorgan Small  Jpmorgan Growth

Very poor diversification

The 3 months correlation between Jpmorgan and Jpmorgan is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Small Cap and Jpmorgan Growth Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Growth Advantage 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 Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Growth Advantage has no effect on the direction of Jpmorgan Small i.e., Jpmorgan Small and Jpmorgan Growth go up and down completely randomly.

Pair Corralation between Jpmorgan Small and Jpmorgan Growth

Assuming the 90 days horizon Jpmorgan Small Cap is expected to under-perform the Jpmorgan Growth. In addition to that, Jpmorgan Small is 1.33 times more volatile than Jpmorgan Growth Advantage. It trades about -0.18 of its total potential returns per unit of risk. Jpmorgan Growth Advantage is currently generating about -0.07 per unit of volatility. If you would invest  3,925  in Jpmorgan Growth Advantage on September 15, 2024 and sell it today you would lose (107.00) from holding Jpmorgan Growth Advantage or give up 2.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Jpmorgan Small Cap  vs.  Jpmorgan Growth Advantage

Jpmorgan Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jpmorgan Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Jpmorgan Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jpmorgan Growth Advantage

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Growth Advantage are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking indicators, Jpmorgan Growth 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 Small and Jpmorgan Growth

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

The idea behind Jpmorgan Small Cap and Jpmorgan Growth Advantage 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.