Correlation Between Jpmorgan Small and Jpmorgan Government

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

Diversification Opportunities for Jpmorgan Small and Jpmorgan Government

0.2

Correlation Coefficient

Jpmorgan Small  Jpmorgan Government

Modest diversification

The 3 months correlation between Jpmorgan and Jpmorgan is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Small Cap and Jpmorgan Government Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Government Bond 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 Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Government Bond has no effect on the direction of Jpmorgan Small i.e., Jpmorgan Small and Jpmorgan Government go up and down completely randomly.

Pair Corralation between Jpmorgan Small and Jpmorgan Government

Assuming the 90 days horizon Jpmorgan Small Cap is expected to under-perform the Jpmorgan Government. In addition to that, Jpmorgan Small is 3.84 times more volatile than Jpmorgan Government Bond. It trades about -0.32 of its total potential returns per unit of risk. Jpmorgan Government Bond is currently generating about 0.31 per unit of volatility. If you would invest  943.00  in Jpmorgan Government Bond on December 2, 2024 and sell it today you would earn a total of  19.00  from holding Jpmorgan Government Bond or generate 2.01% return on investment over 90 days.

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

Jpmorgan Small Cap  vs.  Jpmorgan Government Bond

Jpmorgan Small Cap

Risk-Adjusted Performance

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 latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Jpmorgan Government Bond

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Government Bond are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Jpmorgan Government 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 Government

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

The idea behind Jpmorgan Small Cap and Jpmorgan Government Bond 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.

Check out your portfolio center.

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.