Correlation Between Mid Cap and Jpmorgan Emerging

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

By analyzing existing cross correlation between Mid Cap Strategic and Jpmorgan Emerging Markets, you can compare the effects of market volatilities on Mid Cap and Jpmorgan Emerging 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 Mid Cap with a short position of Jpmorgan Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Jpmorgan Emerging.

Diversification Opportunities for Mid Cap and Jpmorgan Emerging

-0.28

Correlation Coefficient

Mid Cap  Jpmorgan Emerging

Very good diversification

The 3 months correlation between Mid and Jpmorgan is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Strategic and Jpmorgan Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Emerging Markets and Mid Cap 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 Mid Cap Strategic are associated (or correlated) with Jpmorgan Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Emerging Markets has no effect on the direction of Mid Cap i.e., Mid Cap and Jpmorgan Emerging go up and down completely randomly.

Pair Corralation between Mid Cap and Jpmorgan Emerging

Assuming the 90 days horizon Mid Cap Strategic is expected to generate 1.06 times more return on investment than Jpmorgan Emerging. However, Mid Cap is 1.06 times more volatile than Jpmorgan Emerging Markets. It trades about 0.2 of its potential returns per unit of risk. Jpmorgan Emerging Markets is currently generating about 0.05 per unit of risk. If you would invest  1,934  in Mid Cap Strategic on September 13, 2024 and sell it today you would earn a total of  234.00  from holding Mid Cap Strategic or generate 12.1% return on investment over 90 days.

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

Mid Cap Strategic  vs.  Jpmorgan Emerging Markets

Mid Cap Strategic

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap Strategic are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Mid Cap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Jpmorgan Emerging Markets

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Emerging Markets are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking indicators, Jpmorgan Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mid Cap and Jpmorgan Emerging

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

The idea behind Mid Cap Strategic and Jpmorgan Emerging Markets 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.