Correlation Between Pace Smallmedium and Jpmorgan Small

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

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

Diversification Opportunities for Pace Smallmedium and Jpmorgan Small

0.9

Correlation Coefficient

Pace Smallmedium  Jpmorgan Small

Almost no diversification

The 3 months correlation between Pace and Jpmorgan is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Pace Smallmedium Growth and Jpmorgan Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Small Cap and Pace Smallmedium 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 Pace Smallmedium Growth are associated (or correlated) with Jpmorgan Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Small Cap has no effect on the direction of Pace Smallmedium i.e., Pace Smallmedium and Jpmorgan Small go up and down completely randomly.

Pair Corralation between Pace Smallmedium and Jpmorgan Small

Assuming the 90 days horizon Pace Smallmedium Growth is expected to generate 0.9 times more return on investment than Jpmorgan Small. However, Pace Smallmedium Growth is 1.12 times less risky than Jpmorgan Small. It trades about 0.07 of its potential returns per unit of risk. Jpmorgan Small Cap is currently generating about 0.03 per unit of risk. If you would invest  1,178  in Pace Smallmedium Growth on September 14, 2024 and sell it today you would earn a total of  223.00  from holding Pace Smallmedium Growth or generate 18.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.6%
Values	Daily Returns

Pace Smallmedium Growth  vs.  Jpmorgan Small Cap

Pace Smallmedium Growth

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pace Smallmedium Growth are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Pace Smallmedium showed solid returns over the last few months and may actually be approaching a breakup point.

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 basic indicators, Jpmorgan Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pace Smallmedium and Jpmorgan Small

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

The idea behind Pace Smallmedium Growth and Jpmorgan Small 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.