Correlation Between Jpmorgan Smartretirement and Municipal Bond

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

By analyzing existing cross correlation between Jpmorgan Smartretirement 2035 and Municipal Bond Fund, you can compare the effects of market volatilities on Jpmorgan Smartretirement and Municipal Bond 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 Jpmorgan Smartretirement with a short position of Municipal Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan Smartretirement and Municipal Bond.

Diversification Opportunities for Jpmorgan Smartretirement and Municipal Bond

0.5

Correlation Coefficient

Jpmorgan Smartretirement  Municipal Bond

Very weak diversification

The 3 months correlation between Jpmorgan and Municipal is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Smartretirement 2035 and Municipal Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Municipal Bond and Jpmorgan Smartretirement 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 Jpmorgan Smartretirement 2035 are associated (or correlated) with Municipal Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Municipal Bond has no effect on the direction of Jpmorgan Smartretirement i.e., Jpmorgan Smartretirement and Municipal Bond go up and down completely randomly.

Pair Corralation between Jpmorgan Smartretirement and Municipal Bond

Assuming the 90 days horizon Jpmorgan Smartretirement 2035 is expected to under-perform the Municipal Bond. In addition to that, Jpmorgan Smartretirement is 2.68 times more volatile than Municipal Bond Fund. It trades about -0.26 of its total potential returns per unit of risk. Municipal Bond Fund is currently generating about -0.2 per unit of volatility. If you would invest  862.00  in Municipal Bond Fund on September 25, 2024 and sell it today you would lose (9.00) from holding Municipal Bond Fund or give up 1.04% of portfolio value over 90 days.

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

Jpmorgan Smartretirement 2035  vs.  Municipal Bond Fund

Jpmorgan Smartretirement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jpmorgan Smartretirement 2035 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Jpmorgan Smartretirement is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Municipal Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Jpmorgan Smartretirement and Municipal Bond

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

The idea behind Jpmorgan Smartretirement 2035 and Municipal Bond Fund 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.