Correlation Between Jpmorgan Small and Franklin Adjustable

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

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

Diversification Opportunities for Jpmorgan Small and Franklin Adjustable

-0.22

Correlation Coefficient

Jpmorgan Small  Franklin Adjustable

Very good diversification

The 3 months correlation between Jpmorgan and Franklin is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Small Cap and Franklin Adjustable Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Adjustable and Jpmorgan Small 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 Small Cap are associated (or correlated) with Franklin Adjustable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Adjustable has no effect on the direction of Jpmorgan Small i.e., Jpmorgan Small and Franklin Adjustable go up and down completely randomly.

Pair Corralation between Jpmorgan Small and Franklin Adjustable

Assuming the 90 days horizon Jpmorgan Small Cap is expected to generate 9.12 times more return on investment than Franklin Adjustable. However, Jpmorgan Small is 9.12 times more volatile than Franklin Adjustable Government. It trades about 0.13 of its potential returns per unit of risk. Franklin Adjustable Government is currently generating about -0.02 per unit of risk. If you would invest  5,854  in Jpmorgan Small Cap on September 13, 2024 and sell it today you would earn a total of  499.00  from holding Jpmorgan Small Cap or generate 8.52% return on investment over 90 days.

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

Jpmorgan Small Cap  vs.  Franklin Adjustable Government

Jpmorgan Small Cap

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Small Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Jpmorgan Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Franklin Adjustable

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Jpmorgan Small and Franklin Adjustable

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

The idea behind Jpmorgan Small Cap and Franklin Adjustable Government 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.