Correlation Between JPMorgan Climate and ProShares

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

By analyzing existing cross correlation between JPMorgan Climate Change and ProShares On Demand ETF, you can compare the effects of market volatilities on JPMorgan Climate and ProShares 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 Climate with a short position of ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Climate and ProShares.

Diversification Opportunities for JPMorgan Climate and ProShares

0.3

Correlation Coefficient

JPMorgan Climate  ProShares

Weak diversification

The 3 months correlation between JPMorgan and ProShares is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Climate Change and ProShares On Demand ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares On Demand and JPMorgan Climate 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 Climate Change are associated (or correlated) with ProShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares On Demand has no effect on the direction of JPMorgan Climate i.e., JPMorgan Climate and ProShares go up and down completely randomly.

Pair Corralation between JPMorgan Climate and ProShares

Given the investment horizon of 90 days JPMorgan Climate Change is expected to under-perform the ProShares. But the etf apears to be less risky and, when comparing its historical volatility, JPMorgan Climate Change is 1.54 times less risky than ProShares. The etf trades about -0.22 of its potential returns per unit of risk. The ProShares On Demand ETF is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,336  in ProShares On Demand ETF on December 4, 2024 and sell it today you would earn a total of  84.00  from holding ProShares On Demand ETF or generate 2.52% return on investment over 90 days.

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

JPMorgan Climate Change  vs.  ProShares On Demand ETF

JPMorgan Climate Change

Risk-Adjusted Performance

Very Weak

Over the last 90 days JPMorgan Climate Change has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Etf's primary indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

ProShares On Demand

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares On Demand ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ProShares is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with JPMorgan Climate and ProShares

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

The idea behind JPMorgan Climate Change and ProShares On Demand ETF 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.