Correlation Between SISF BRIC and JPMIF Bond

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

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

Diversification Opportunities for SISF BRIC and JPMIF Bond

0.19

Correlation Coefficient

SISF BRIC  JPMIF Bond

Average diversification

The 3 months correlation between SISF and JPMIF is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding SISF BRIC AC and JPMIF Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMIF Bond Fund and SISF BRIC 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 SISF BRIC AC are associated (or correlated) with JPMIF Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMIF Bond Fund has no effect on the direction of SISF BRIC i.e., SISF BRIC and JPMIF Bond go up and down completely randomly.

Pair Corralation between SISF BRIC and JPMIF Bond

Assuming the 90 days trading horizon SISF BRIC AC is expected to generate 2.7 times more return on investment than JPMIF Bond. However, SISF BRIC is 2.7 times more volatile than JPMIF Bond Fund. It trades about 0.07 of its potential returns per unit of risk. JPMIF Bond Fund is currently generating about 0.14 per unit of risk. If you would invest  20,150  in SISF BRIC AC on September 22, 2024 and sell it today you would earn a total of  1,140  from holding SISF BRIC AC or generate 5.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

SISF BRIC AC  vs.  JPMIF Bond Fund

SISF BRIC AC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SISF BRIC AC are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, SISF BRIC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

JPMIF Bond Fund

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPMIF Bond Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, JPMIF Bond is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SISF BRIC and JPMIF Bond

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

The idea behind SISF BRIC AC and JPMIF 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.