Correlation Between Amana Developing and Jpmorgan Emerging

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Can any of the company-specific risk be diversified away by investing in both Amana Developing 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 Amana Developing and Jpmorgan Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amana Developing World and Jpmorgan Emerging Markets, you can compare the effects of market volatilities on Amana Developing 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 Amana Developing with a short position of Jpmorgan Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amana Developing and Jpmorgan Emerging.

Diversification Opportunities for Amana Developing and Jpmorgan Emerging

0.92
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Amana and Jpmorgan is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding AMANA DEVELOPING WORLD 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 Amana Developing 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 Amana Developing World 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 Amana Developing i.e., Amana Developing and Jpmorgan Emerging go up and down completely randomly.

Pair Corralation between Amana Developing and Jpmorgan Emerging

Assuming the 90 days horizon Amana Developing World is expected to generate 1.13 times more return on investment than Jpmorgan Emerging. However, Amana Developing is 1.13 times more volatile than Jpmorgan Emerging Markets. It trades about 0.16 of its potential returns per unit of risk. Jpmorgan Emerging Markets is currently generating about 0.12 per unit of risk. If you would invest  1,275  in Amana Developing World on December 29, 2023 and sell it today you would earn a total of  36.00  from holding Amana Developing World or generate 2.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

AMANA DEVELOPING WORLD  vs.  JPMORGAN EMERGING MARKETS

 Performance 
       Timeline  
Amana Developing World 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Amana Developing World are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Amana Developing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Jpmorgan Emerging Markets 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Emerging Markets are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Jpmorgan Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Amana Developing and Jpmorgan Emerging Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amana Developing and Jpmorgan Emerging

The main advantage of trading using opposite Amana Developing and Jpmorgan Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amana Developing 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 Amana Developing World 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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