Correlation Between Visa and Jpmorgan Hedged

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

By analyzing existing cross correlation between Visa Class A and Jpmorgan Hedged Equity, you can compare the effects of market volatilities on Visa and Jpmorgan Hedged 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 Visa with a short position of Jpmorgan Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Jpmorgan Hedged.

Diversification Opportunities for Visa and Jpmorgan Hedged

0.84

Correlation Coefficient

Visa  Jpmorgan Hedged

Very poor diversification

The 3 months correlation between Visa and Jpmorgan is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Jpmorgan Hedged Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Hedged Equity and Visa 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 Visa Class A are associated (or correlated) with Jpmorgan Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Hedged Equity has no effect on the direction of Visa i.e., Visa and Jpmorgan Hedged go up and down completely randomly.

Pair Corralation between Visa and Jpmorgan Hedged

Taking into account the 90-day investment horizon Visa Class A is expected to generate 2.55 times more return on investment than Jpmorgan Hedged. However, Visa is 2.55 times more volatile than Jpmorgan Hedged Equity. It trades about 0.09 of its potential returns per unit of risk. Jpmorgan Hedged Equity is currently generating about 0.13 per unit of risk. If you would invest  27,028  in Visa Class A on September 24, 2024 and sell it today you would earn a total of  4,743  from holding Visa Class A or generate 17.55% return on investment over 90 days.

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

Visa Class A  vs.  Jpmorgan Hedged Equity

Visa Class A

Risk-Adjusted Performance

17 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.

Jpmorgan Hedged Equity

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Hedged Equity are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Jpmorgan Hedged is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and Jpmorgan Hedged

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

The idea behind Visa Class A and Jpmorgan Hedged 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.

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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.