Correlation Between Balanced Strategy and Jpmorgan Smartretirement

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

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

Diversification Opportunities for Balanced Strategy and Jpmorgan Smartretirement

0.74

Correlation Coefficient

Balanced Strategy  Jpmorgan Smartretirement

Poor diversification

The 3 months correlation between Balanced and Jpmorgan is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Strategy Fund and Jpmorgan Smartretirement Incom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Smartretirement and Balanced Strategy 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 Balanced Strategy Fund are associated (or correlated) with Jpmorgan Smartretirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Smartretirement has no effect on the direction of Balanced Strategy i.e., Balanced Strategy and Jpmorgan Smartretirement go up and down completely randomly.

Pair Corralation between Balanced Strategy and Jpmorgan Smartretirement

Assuming the 90 days horizon Balanced Strategy Fund is expected to generate 1.1 times more return on investment than Jpmorgan Smartretirement. However, Balanced Strategy is 1.1 times more volatile than Jpmorgan Smartretirement Income. It trades about 0.07 of its potential returns per unit of risk. Jpmorgan Smartretirement Income is currently generating about 0.05 per unit of risk. If you would invest  855.00  in Balanced Strategy Fund on October 10, 2024 and sell it today you would earn a total of  173.00  from holding Balanced Strategy Fund or generate 20.23% return on investment over 90 days.

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

Balanced Strategy Fund  vs.  Jpmorgan Smartretirement Incom

Balanced Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Jpmorgan Smartretirement

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Balanced Strategy and Jpmorgan Smartretirement

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

The idea behind Balanced Strategy Fund and Jpmorgan Smartretirement Income 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.