Correlation Between Westwood Market and Jpmorgan Research

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

By analyzing existing cross correlation between Westwood Market Neutral and Jpmorgan Research Market, you can compare the effects of market volatilities on Westwood Market and Jpmorgan Research 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 Westwood Market with a short position of Jpmorgan Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westwood Market and Jpmorgan Research.

Diversification Opportunities for Westwood Market and Jpmorgan Research

0.36

Correlation Coefficient

Westwood Market  Jpmorgan Research

Weak diversification

The 3 months correlation between Westwood and Jpmorgan is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Westwood Market Neutral and Jpmorgan Research Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Research Market and Westwood Market 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 Westwood Market Neutral are associated (or correlated) with Jpmorgan Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Research Market has no effect on the direction of Westwood Market i.e., Westwood Market and Jpmorgan Research go up and down completely randomly.

Pair Corralation between Westwood Market and Jpmorgan Research

Assuming the 90 days horizon Westwood Market Neutral is not expected to generate positive returns. However, Westwood Market Neutral is 9.16 times less risky than Jpmorgan Research. It waists most of its returns potential to compensate for thr risk taken. Jpmorgan Research is generating about -0.27 per unit of risk. If you would invest  972.00  in Westwood Market Neutral on September 27, 2024 and sell it today you would earn a total of  0.00  from holding Westwood Market Neutral or generate 0.0% return on investment over 90 days.

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

Westwood Market Neutral  vs.  Jpmorgan Research Market

Westwood Market Neutral

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Westwood Market Neutral are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Westwood Market is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jpmorgan Research Market

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Westwood Market and Jpmorgan Research

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

The idea behind Westwood Market Neutral and Jpmorgan Research Market 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.