Correlation Between Gold Bullion and Jpmorgan

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

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

Diversification Opportunities for Gold Bullion and Jpmorgan

0.45

Correlation Coefficient

Gold Bullion  Jpmorgan

Very weak diversification

The 3 months correlation between Gold and Jpmorgan is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding The Gold Bullion and Jpmorgan Research Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Research Equity and Gold Bullion 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 The Gold Bullion are associated (or correlated) with Jpmorgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Research Equity has no effect on the direction of Gold Bullion i.e., Gold Bullion and Jpmorgan go up and down completely randomly.

Pair Corralation between Gold Bullion and Jpmorgan

Assuming the 90 days horizon Gold Bullion is expected to generate 2.35 times less return on investment than Jpmorgan. In addition to that, Gold Bullion is 2.45 times more volatile than Jpmorgan Research Equity. It trades about 0.01 of its total potential returns per unit of risk. Jpmorgan Research Equity is currently generating about 0.08 per unit of volatility. If you would invest  1,188  in Jpmorgan Research Equity on October 9, 2024 and sell it today you would earn a total of  254.00  from holding Jpmorgan Research Equity or generate 21.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

The Gold Bullion  vs.  Jpmorgan Research Equity

Gold Bullion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Gold Bullion has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Jpmorgan Research Equity

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Gold Bullion and Jpmorgan

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

The idea behind The Gold Bullion and Jpmorgan Research Equity 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.