Correlation Between ALPSSmith Credit and JP Morgan

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

By analyzing existing cross correlation between ALPSSmith Credit Opportunities and JP Morgan Exchange Traded, you can compare the effects of market volatilities on ALPSSmith Credit and JP Morgan 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 ALPSSmith Credit with a short position of JP Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALPSSmith Credit and JP Morgan.

Diversification Opportunities for ALPSSmith Credit and JP Morgan

0.88

Correlation Coefficient

ALPSSmith Credit  JP Morgan

Very poor diversification

The 3 months correlation between ALPSSmith and JPIE is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding ALPSSmith Credit Opportunities and JP Morgan Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JP Morgan Exchange and ALPSSmith Credit 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 ALPSSmith Credit Opportunities are associated (or correlated) with JP Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JP Morgan Exchange has no effect on the direction of ALPSSmith Credit i.e., ALPSSmith Credit and JP Morgan go up and down completely randomly.

Pair Corralation between ALPSSmith Credit and JP Morgan

Assuming the 90 days horizon ALPSSmith Credit is expected to generate 1.02 times less return on investment than JP Morgan. In addition to that, ALPSSmith Credit is 2.24 times more volatile than JP Morgan Exchange Traded. It trades about 0.3 of its total potential returns per unit of risk. JP Morgan Exchange Traded is currently generating about 0.69 per unit of volatility. If you would invest  4,542  in JP Morgan Exchange Traded on September 13, 2024 and sell it today you would earn a total of  46.00  from holding JP Morgan Exchange Traded or generate 1.01% return on investment over 90 days.

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

ALPSSmith Credit Opportunities  vs.  JP Morgan Exchange Traded

ALPSSmith Credit Opp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ALPSSmith Credit Opportunities are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, ALPSSmith Credit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

JP Morgan Exchange

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JP Morgan Exchange Traded are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, JP Morgan is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ALPSSmith Credit and JP Morgan

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

The idea behind ALPSSmith Credit Opportunities and JP Morgan Exchange Traded 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.