Correlation Between Smead International and Jpmorgan Diversified

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

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

Diversification Opportunities for Smead International and Jpmorgan Diversified

0.41

Correlation Coefficient

Smead International  Jpmorgan Diversified

Very weak diversification

The 3 months correlation between Smead and Jpmorgan is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Smead International Value and Jpmorgan Diversified Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Diversified and Smead International 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 Smead International Value are associated (or correlated) with Jpmorgan Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Diversified has no effect on the direction of Smead International i.e., Smead International and Jpmorgan Diversified go up and down completely randomly.

Pair Corralation between Smead International and Jpmorgan Diversified

Assuming the 90 days horizon Smead International Value is expected to generate 1.32 times more return on investment than Jpmorgan Diversified. However, Smead International is 1.32 times more volatile than Jpmorgan Diversified Fund. It trades about 0.07 of its potential returns per unit of risk. Jpmorgan Diversified Fund is currently generating about -0.07 per unit of risk. If you would invest  5,610  in Smead International Value on December 3, 2024 and sell it today you would earn a total of  179.00  from holding Smead International Value or generate 3.19% return on investment over 90 days.

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

Smead International Value  vs.  Jpmorgan Diversified Fund

Smead International Value

Risk-Adjusted Performance

Modest

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

Jpmorgan Diversified

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Smead International and Jpmorgan Diversified

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

The idea behind Smead International Value and Jpmorgan Diversified 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.