Correlation Between Smallcap Growth and Jpmorgan International

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

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

Diversification Opportunities for Smallcap Growth and Jpmorgan International

-0.48

Correlation Coefficient

Smallcap Growth  Jpmorgan International

Very good diversification

The 3 months correlation between Smallcap and Jpmorgan is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Growth Fund and Jpmorgan International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan International and Smallcap Growth 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 Smallcap Growth Fund are associated (or correlated) with Jpmorgan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan International has no effect on the direction of Smallcap Growth i.e., Smallcap Growth and Jpmorgan International go up and down completely randomly.

Pair Corralation between Smallcap Growth and Jpmorgan International

Assuming the 90 days horizon Smallcap Growth Fund is expected to under-perform the Jpmorgan International. In addition to that, Smallcap Growth is 1.68 times more volatile than Jpmorgan International Value. It trades about -0.12 of its total potential returns per unit of risk. Jpmorgan International Value is currently generating about 0.27 per unit of volatility. If you would invest  1,402  in Jpmorgan International Value on December 30, 2024 and sell it today you would earn a total of  205.00  from holding Jpmorgan International Value or generate 14.62% return on investment over 90 days.

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

Smallcap Growth Fund  vs.  Jpmorgan International Value

Smallcap Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Smallcap Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Jpmorgan International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan International Value are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Jpmorgan International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Smallcap Growth and Jpmorgan International

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

The idea behind Smallcap Growth Fund and Jpmorgan International Value 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.