Correlation Between JPMorgan USD and WisdomTree Interest

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

By analyzing existing cross correlation between JPMorgan USD Emerging and WisdomTree Interest Rate, you can compare the effects of market volatilities on JPMorgan USD and WisdomTree Interest 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 USD with a short position of WisdomTree Interest. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan USD and WisdomTree Interest.

Diversification Opportunities for JPMorgan USD and WisdomTree Interest

-0.08

Correlation Coefficient

JPMorgan USD  WisdomTree Interest

Good diversification

The 1 month correlation between JPMorgan and WisdomTree is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan USD Emerging and WisdomTree Interest Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Interest Rate and JPMorgan USD 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 USD Emerging are associated (or correlated) with WisdomTree Interest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Interest Rate has no effect on the direction of JPMorgan USD i.e., JPMorgan USD and WisdomTree Interest go up and down completely randomly.

Pair Corralation between JPMorgan USD and WisdomTree Interest

Given the investment horizon of 90 days JPMorgan USD Emerging is expected to under-perform the WisdomTree Interest. In addition to that, JPMorgan USD is 3.43 times more volatile than WisdomTree Interest Rate. It trades about -0.06 of its total potential returns per unit of risk. WisdomTree Interest Rate is currently generating about 0.21 per unit of volatility. If you would invest  2,206  in WisdomTree Interest Rate on February 9, 2024 and sell it today you would earn a total of  17.00  from holding WisdomTree Interest Rate or generate 0.77% return on investment over 90 days.

Time Period	1 Month [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

JPMorgan USD Emerging  vs.  WisdomTree Interest Rate

JPMorgan USD Emerging

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days JPMorgan USD Emerging has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, JPMorgan USD is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

WisdomTree Interest Rate

Risk-Adjusted Performance

16 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Interest Rate are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, WisdomTree Interest is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with JPMorgan USD and WisdomTree Interest

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

The idea behind JPMorgan USD Emerging and WisdomTree Interest Rate 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.