Correlation Between ProShares and JP Morgan

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

By analyzing existing cross correlation between ProShares DJ Brookfield and JP Morgan Exchange Traded, you can compare the effects of market volatilities on ProShares and JP Morgan 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 ProShares with a short position of JP Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and JP Morgan.

Diversification Opportunities for ProShares and JP Morgan

0.73

Correlation Coefficient

ProShares  JP Morgan

Poor diversification

The 3 months correlation between ProShares and BLLD is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding ProShares DJ Brookfield and JP Morgan Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JP Morgan Exchange and ProShares 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 ProShares DJ Brookfield are associated (or correlated) with JP Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JP Morgan Exchange has no effect on the direction of ProShares i.e., ProShares and JP Morgan go up and down completely randomly.

Pair Corralation between ProShares and JP Morgan

Given the investment horizon of 90 days ProShares DJ Brookfield is expected to generate 0.94 times more return on investment than JP Morgan. However, ProShares DJ Brookfield is 1.07 times less risky than JP Morgan. It trades about 0.14 of its potential returns per unit of risk. JP Morgan Exchange Traded is currently generating about 0.08 per unit of risk. If you would invest  4,908  in ProShares DJ Brookfield on December 26, 2024 and sell it today you would earn a total of  335.00  from holding ProShares DJ Brookfield or generate 6.83% return on investment over 90 days.

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

ProShares DJ Brookfield  vs.  JP Morgan Exchange Traded

ProShares DJ Brookfield

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares DJ Brookfield are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, ProShares may actually be approaching a critical reversion point that can send shares even higher in April 2025.

JP Morgan Exchange

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JP Morgan Exchange Traded are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, JP Morgan is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ProShares and JP Morgan

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

The idea behind ProShares DJ Brookfield and JP Morgan Exchange Traded 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.