Correlation Between JPMorgan and Xtrackers California

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

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

Diversification Opportunities for JPMorgan and Xtrackers California

-0.28

Correlation Coefficient

JPMorgan  Xtrackers California

Very good diversification

The 24 months correlation between JPMorgan and Xtrackers is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan and Xtrackers California Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers California and JPMorgan 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 are associated (or correlated) with Xtrackers California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers California has no effect on the direction of JPMorgan i.e., JPMorgan and Xtrackers California go up and down completely randomly.

Pair Corralation between JPMorgan and Xtrackers California

If you would invest  5,196  in JPMorgan on February 7, 2024 and sell it today you would earn a total of  0.00  from holding JPMorgan or generate 0.0% return on investment over 90 days.

Time Period	24 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

JPMorgan  vs.  Xtrackers California Municipal

JPMorgan

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days JPMorgan has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, JPMorgan is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Xtrackers California

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtrackers California Municipal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Xtrackers California 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 and Xtrackers California

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

The idea behind JPMorgan and Xtrackers California 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.