Correlation Between Dow 2x and Jpmorgan Smartretirement

Can any of the company-specific risk be diversified away by investing in both Dow 2x 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 Dow 2x and Jpmorgan Smartretirement into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dow 2x Strategy and Jpmorgan Smartretirement 2055, you can compare the effects of market volatilities on Dow 2x 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 Dow 2x with a short position of Jpmorgan Smartretirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow 2x and Jpmorgan Smartretirement.

Diversification Opportunities for Dow 2x and Jpmorgan Smartretirement

0.88

Correlation Coefficient

Dow 2x  Jpmorgan Smartretirement

Very poor diversification

The 3 months correlation between Dow and Jpmorgan is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Dow 2x Strategy and Jpmorgan Smartretirement 2055 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Smartretirement and Dow 2x 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 Dow 2x Strategy 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 Dow 2x i.e., Dow 2x and Jpmorgan Smartretirement go up and down completely randomly.

Pair Corralation between Dow 2x and Jpmorgan Smartretirement

Assuming the 90 days horizon Dow 2x Strategy is expected to generate 2.0 times more return on investment than Jpmorgan Smartretirement. However, Dow 2x is 2.0 times more volatile than Jpmorgan Smartretirement 2055. It trades about 0.07 of its potential returns per unit of risk. Jpmorgan Smartretirement 2055 is currently generating about 0.08 per unit of risk. If you would invest  11,999  in Dow 2x Strategy on October 26, 2024 and sell it today you would earn a total of  6,179  from holding Dow 2x Strategy or generate 51.5% return on investment over 90 days.

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

Dow 2x Strategy  vs.  Jpmorgan Smartretirement 2055

Dow 2x Strategy

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dow 2x Strategy are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Dow 2x may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Jpmorgan Smartretirement

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Smartretirement 2055 are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. 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 Dow 2x and Jpmorgan Smartretirement

The main advantage of trading using opposite Dow 2x and Jpmorgan Smartretirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow 2x 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 Dow 2x Strategy and Jpmorgan Smartretirement 2055 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.