Correlation Between SISF BRIC and JPM America

Can any of the company-specific risk be diversified away by investing in both SISF BRIC and JPM America 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 JPM America 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 JPM America Equity, you can compare the effects of market volatilities on SISF BRIC and JPM America 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 JPM America. Check out your portfolio center. Please also check ongoing floating volatility patterns of SISF BRIC and JPM America.

Diversification Opportunities for SISF BRIC and JPM America

-0.43

Correlation Coefficient

SISF BRIC  JPM America

Very good diversification

The 3 months correlation between SISF and JPM is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding SISF BRIC AC and JPM America Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM America Equity 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 JPM America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM America Equity has no effect on the direction of SISF BRIC i.e., SISF BRIC and JPM America go up and down completely randomly.

Pair Corralation between SISF BRIC and JPM America

Assuming the 90 days trading horizon SISF BRIC AC is expected to under-perform the JPM America. In addition to that, SISF BRIC is 1.54 times more volatile than JPM America Equity. It trades about -0.05 of its total potential returns per unit of risk. JPM America Equity is currently generating about -0.08 per unit of volatility. If you would invest  44,257  in JPM America Equity on October 4, 2024 and sell it today you would lose (568.00) from holding JPM America Equity or give up 1.28% of portfolio value over 90 days.

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

SISF BRIC AC  vs.  JPM America Equity

SISF BRIC AC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SISF BRIC AC has generated negative risk-adjusted returns adding no value to fund investors. 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.

JPM America Equity

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPM America Equity are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather unsteady technical and fundamental indicators, JPM America may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SISF BRIC and JPM America

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

The idea behind SISF BRIC AC and JPM America Equity 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.

Check out your portfolio center.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.