Correlation Between SPDR Barclays and JPMorgan Short

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

By analyzing existing cross correlation between SPDR Barclays Short and JPMorgan Short Duration, you can compare the effects of market volatilities on SPDR Barclays and JPMorgan Short 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 SPDR Barclays with a short position of JPMorgan Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Barclays and JPMorgan Short.

Diversification Opportunities for SPDR Barclays and JPMorgan Short

0.78

Correlation Coefficient

SPDR Barclays  JPMorgan Short

Poor diversification

The 3 months correlation between SPDR and JPMorgan is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Barclays Short and JPMorgan Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Short Duration and SPDR Barclays 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 SPDR Barclays Short are associated (or correlated) with JPMorgan Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Short Duration has no effect on the direction of SPDR Barclays i.e., SPDR Barclays and JPMorgan Short go up and down completely randomly.

Pair Corralation between SPDR Barclays and JPMorgan Short

Given the investment horizon of 90 days SPDR Barclays Short is expected to generate 0.69 times more return on investment than JPMorgan Short. However, SPDR Barclays Short is 1.44 times less risky than JPMorgan Short. It trades about 0.1 of its potential returns per unit of risk. JPMorgan Short Duration is currently generating about 0.01 per unit of risk. If you would invest  2,982  in SPDR Barclays Short on September 12, 2024 and sell it today you would earn a total of  17.00  from holding SPDR Barclays Short or generate 0.57% return on investment over 90 days.

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

SPDR Barclays Short  vs.  JPMorgan Short Duration

SPDR Barclays Short

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Barclays Short are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SPDR Barclays is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

JPMorgan Short Duration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMorgan Short Duration has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, JPMorgan Short is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with SPDR Barclays and JPMorgan Short

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

The idea behind SPDR Barclays Short and JPMorgan Short Duration 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.