Correlation Between Energy Basic and Vy(r) Jpmorgan

Can any of the company-specific risk be diversified away by investing in both Energy Basic and Vy(r) 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 Energy Basic and Vy(r) Jpmorgan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Energy Basic Materials and Vy Jpmorgan Emerging, you can compare the effects of market volatilities on Energy Basic and Vy(r) 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 Energy Basic with a short position of Vy(r) Jpmorgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Basic and Vy(r) Jpmorgan.

Diversification Opportunities for Energy Basic and Vy(r) Jpmorgan

0.64

Correlation Coefficient

Energy Basic  Vy(r) Jpmorgan

Poor diversification

The 3 months correlation between Energy and Vy(r) is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Energy Basic Materials and Vy Jpmorgan Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vy Jpmorgan Emerging and Energy Basic 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 Energy Basic Materials are associated (or correlated) with Vy(r) Jpmorgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vy Jpmorgan Emerging has no effect on the direction of Energy Basic i.e., Energy Basic and Vy(r) Jpmorgan go up and down completely randomly.

Pair Corralation between Energy Basic and Vy(r) Jpmorgan

Assuming the 90 days horizon Energy Basic is expected to generate 1.28 times less return on investment than Vy(r) Jpmorgan. In addition to that, Energy Basic is 1.16 times more volatile than Vy Jpmorgan Emerging. It trades about 0.02 of its total potential returns per unit of risk. Vy Jpmorgan Emerging is currently generating about 0.03 per unit of volatility. If you would invest  1,111  in Vy Jpmorgan Emerging on October 5, 2024 and sell it today you would earn a total of  114.00  from holding Vy Jpmorgan Emerging or generate 10.26% return on investment over 90 days.

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

Energy Basic Materials  vs.  Vy Jpmorgan Emerging

Energy Basic Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energy Basic Materials 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 drivers 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.

Vy Jpmorgan Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vy Jpmorgan Emerging has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Energy Basic and Vy(r) Jpmorgan

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

The idea behind Energy Basic Materials and Vy Jpmorgan Emerging 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.