Correlation Between First Trust and JPMorgan BetaBuilders
Can any of the company-specific risk be diversified away by investing in both First Trust and JPMorgan BetaBuilders 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 First Trust and JPMorgan BetaBuilders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Japan and JPMorgan BetaBuilders Japan, you can compare the effects of market volatilities on First Trust and JPMorgan BetaBuilders 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 First Trust with a short position of JPMorgan BetaBuilders. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and JPMorgan BetaBuilders.
Diversification Opportunities for First Trust and JPMorgan BetaBuilders
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and JPMorgan is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Japan and JPMorgan BetaBuilders Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan BetaBuilders and First Trust 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 First Trust Japan are associated (or correlated) with JPMorgan BetaBuilders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan BetaBuilders has no effect on the direction of First Trust i.e., First Trust and JPMorgan BetaBuilders go up and down completely randomly.
Pair Corralation between First Trust and JPMorgan BetaBuilders
Considering the 90-day investment horizon First Trust Japan is expected to generate 1.19 times more return on investment than JPMorgan BetaBuilders. However, First Trust is 1.19 times more volatile than JPMorgan BetaBuilders Japan. It trades about -0.23 of its potential returns per unit of risk. JPMorgan BetaBuilders Japan is currently generating about -0.37 per unit of risk. If you would invest 5,495 in First Trust Japan on January 20, 2024 and sell it today you would lose (260.00) from holding First Trust Japan or give up 4.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Japan vs. JPMorgan BetaBuilders Japan
Performance |
| Timeline |
| First Trust Japan |
| JPMorgan BetaBuilders |
First Trust and JPMorgan BetaBuilders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and JPMorgan BetaBuilders
The main advantage of trading using opposite First Trust and JPMorgan BetaBuilders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, JPMorgan BetaBuilders 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 BetaBuilders will offset losses from the drop in JPMorgan BetaBuilders' long position.| First Trust vs. iShares MSCI South | First Trust vs. iShares MSCI Hong | First Trust vs. iShares MSCI Taiwan | First Trust vs. iShares MSCI Germany |
| JPMorgan BetaBuilders vs. iShares MSCI South | JPMorgan BetaBuilders vs. iShares MSCI Hong | JPMorgan BetaBuilders vs. iShares MSCI Taiwan | JPMorgan BetaBuilders vs. iShares MSCI Germany |
Check out your portfolio center.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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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