Correlation Between JPMorgan BetaBuilders and First Trust

Can any of the company-specific risk be diversified away by investing in both JPMorgan BetaBuilders and First Trust 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 BetaBuilders and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JPMorgan BetaBuilders Europe and First Trust RiverFront, you can compare the effects of market volatilities on JPMorgan BetaBuilders and First Trust 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 BetaBuilders with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan BetaBuilders and First Trust.

Diversification Opportunities for JPMorgan BetaBuilders and First Trust

0.87

Correlation Coefficient

JPMorgan BetaBuilders  First Trust

Very poor diversification

The 3 months correlation between JPMorgan and First is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan BetaBuilders Europe and First Trust RiverFront in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust RiverFront and JPMorgan BetaBuilders 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 BetaBuilders Europe are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust RiverFront has no effect on the direction of JPMorgan BetaBuilders i.e., JPMorgan BetaBuilders and First Trust go up and down completely randomly.

Pair Corralation between JPMorgan BetaBuilders and First Trust

Given the investment horizon of 90 days JPMorgan BetaBuilders is expected to generate 1.06 times less return on investment than First Trust. In addition to that, JPMorgan BetaBuilders is 1.06 times more volatile than First Trust RiverFront. It trades about 0.08 of its total potential returns per unit of risk. First Trust RiverFront is currently generating about 0.09 per unit of volatility. If you would invest  5,594  in First Trust RiverFront on February 15, 2024 and sell it today you would earn a total of  943.00  from holding First Trust RiverFront or generate 16.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.6%
Values	Daily Returns

JPMorgan BetaBuilders Europe  vs.  First Trust RiverFront

JPMorgan BetaBuilders

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan BetaBuilders Europe are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting technical and fundamental indicators, JPMorgan BetaBuilders may actually be approaching a critical reversion point that can send shares even higher in June 2024.

First Trust RiverFront

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust RiverFront are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, First Trust is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with JPMorgan BetaBuilders and First Trust

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

The idea behind JPMorgan BetaBuilders Europe and First Trust RiverFront 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.