Correlation Between SPDR SP and JPMorgan Ultra

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Can any of the company-specific risk be diversified away by investing in both SPDR SP and JPMorgan Ultra 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 SPDR SP and JPMorgan Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP 500 and JPMorgan Ultra Short Municipal, you can compare the effects of market volatilities on SPDR SP and JPMorgan Ultra 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 SPDR SP with a short position of JPMorgan Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and JPMorgan Ultra.

Diversification Opportunities for SPDR SP and JPMorgan Ultra

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between SPDR and JPMorgan is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and JPMorgan Ultra-Short Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Ultra-Short and SPDR SP 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 SPDR SP 500 are associated (or correlated) with JPMorgan Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Ultra-Short has no effect on the direction of SPDR SP i.e., SPDR SP and JPMorgan Ultra go up and down completely randomly.

Pair Corralation between SPDR SP and JPMorgan Ultra

Considering the 90-day investment horizon SPDR SP 500 is expected to generate 7.91 times more return on investment than JPMorgan Ultra. However, SPDR SP is 7.91 times more volatile than JPMorgan Ultra Short Municipal. It trades about 0.27 of its potential returns per unit of risk. JPMorgan Ultra Short Municipal is currently generating about -0.08 per unit of risk. If you would invest  50,536  in SPDR SP 500 on December 29, 2023 and sell it today you would earn a total of  1,781  from holding SPDR SP 500 or generate 3.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

SPDR SP 500  vs.  JPMorgan Ultra-Short Municipal

 Performance 
       Timeline  
SPDR SP 500 

Risk-Adjusted Performance

18 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP 500 are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, SPDR SP may actually be approaching a critical reversion point that can send shares even higher in April 2024.
JPMorgan Ultra-Short 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Ultra Short Municipal are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, JPMorgan Ultra is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

SPDR SP and JPMorgan Ultra Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SPDR SP and JPMorgan Ultra

The main advantage of trading using opposite SPDR SP and JPMorgan Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, JPMorgan Ultra 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 Ultra will offset losses from the drop in JPMorgan Ultra's long position.
The idea behind SPDR SP 500 and JPMorgan Ultra Short Municipal 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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