Correlation Between JPMorgan Diversified and SPDR SP

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

By analyzing existing cross correlation between JPMorgan Diversified Return and SPDR SP 600, you can compare the effects of market volatilities on JPMorgan Diversified and SPDR SP 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 Diversified with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Diversified and SPDR SP.

Diversification Opportunities for JPMorgan Diversified and SPDR SP

0.75

Correlation Coefficient

JPMorgan Diversified  SPDR SP

Poor diversification

The 3 months correlation between JPMorgan and SPDR is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Diversified Return and SPDR SP 600 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 600 and JPMorgan Diversified 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 Diversified Return are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP 600 has no effect on the direction of JPMorgan Diversified i.e., JPMorgan Diversified and SPDR SP go up and down completely randomly.

Pair Corralation between JPMorgan Diversified and SPDR SP

Given the investment horizon of 90 days JPMorgan Diversified Return is expected to generate 0.89 times more return on investment than SPDR SP. However, JPMorgan Diversified Return is 1.12 times less risky than SPDR SP. It trades about 0.21 of its potential returns per unit of risk. SPDR SP 600 is currently generating about 0.14 per unit of risk. If you would invest  4,293  in JPMorgan Diversified Return on March 2, 2024 and sell it today you would earn a total of  154.00  from holding JPMorgan Diversified Return or generate 3.59% return on investment over 90 days.

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

JPMorgan Diversified Return  vs.  SPDR SP 600

JPMorgan Diversified

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Diversified Return are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, JPMorgan Diversified is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

SPDR SP 600

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR SP 600 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, SPDR SP is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with JPMorgan Diversified and SPDR SP

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

The idea behind JPMorgan Diversified Return and SPDR SP 600 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.