Correlation Between Jpmorgan Equity and Fidelity Mid

Can any of the company-specific risk be diversified away by investing in both Jpmorgan Equity and Fidelity Mid 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 Equity and Fidelity Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jpmorgan Equity Income and Fidelity Mid Cap, you can compare the effects of market volatilities on Jpmorgan Equity and Fidelity Mid 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 Equity with a short position of Fidelity Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan Equity and Fidelity Mid.

Diversification Opportunities for Jpmorgan Equity and Fidelity Mid

0.91

Correlation Coefficient

Jpmorgan Equity  Fidelity Mid

Almost no diversification

The 3 months correlation between Jpmorgan and Fidelity is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Equity Income and Fidelity Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Mid Cap and Jpmorgan Equity 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 Equity Income are associated (or correlated) with Fidelity Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Mid Cap has no effect on the direction of Jpmorgan Equity i.e., Jpmorgan Equity and Fidelity Mid go up and down completely randomly.

Pair Corralation between Jpmorgan Equity and Fidelity Mid

Assuming the 90 days horizon Jpmorgan Equity is expected to generate 1.22 times less return on investment than Fidelity Mid. But when comparing it to its historical volatility, Jpmorgan Equity Income is 1.47 times less risky than Fidelity Mid. It trades about 0.19 of its potential returns per unit of risk. Fidelity Mid Cap is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,710  in Fidelity Mid Cap on February 12, 2024 and sell it today you would earn a total of  475.00  from holding Fidelity Mid Cap or generate 17.53% return on investment over 90 days.

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

Jpmorgan Equity Income  vs.  Fidelity Mid Cap

Jpmorgan Equity Income

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Equity Income are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking indicators, Jpmorgan Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Mid Cap

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Mid Cap are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Fidelity Mid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jpmorgan Equity and Fidelity Mid

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

The idea behind Jpmorgan Equity Income and Fidelity Mid Cap 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.