Correlation Between Jpmorgan Mid and Principal Lifetime

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

By analyzing existing cross correlation between Jpmorgan Mid Cap and Principal Lifetime 2030, you can compare the effects of market volatilities on Jpmorgan Mid and Principal Lifetime 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 Mid with a short position of Principal Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan Mid and Principal Lifetime.

Diversification Opportunities for Jpmorgan Mid and Principal Lifetime

0.69

Correlation Coefficient

Jpmorgan Mid  Principal Lifetime

Poor diversification

The 3 months correlation between Jpmorgan and Principal is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Mid Cap and Principal Lifetime 2030 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Lifetime 2030 and Jpmorgan Mid 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 Mid Cap are associated (or correlated) with Principal Lifetime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Lifetime 2030 has no effect on the direction of Jpmorgan Mid i.e., Jpmorgan Mid and Principal Lifetime go up and down completely randomly.

Pair Corralation between Jpmorgan Mid and Principal Lifetime

Assuming the 90 days horizon Jpmorgan Mid is expected to generate 1.17 times less return on investment than Principal Lifetime. In addition to that, Jpmorgan Mid is 1.98 times more volatile than Principal Lifetime 2030. It trades about 0.1 of its total potential returns per unit of risk. Principal Lifetime 2030 is currently generating about 0.23 per unit of volatility. If you would invest  1,393  in Principal Lifetime 2030 on May 6, 2025 and sell it today you would earn a total of  85.00  from holding Principal Lifetime 2030 or generate 6.1% return on investment over 90 days.

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

Jpmorgan Mid Cap  vs.  Principal Lifetime 2030

Jpmorgan Mid Cap

Risk-Adjusted Performance

OK

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

Principal Lifetime 2030

Risk-Adjusted Performance

Solid

Over the last 90 days Principal Lifetime 2030 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking indicators, Principal Lifetime 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 Mid and Principal Lifetime

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

The idea behind Jpmorgan Mid Cap and Principal Lifetime 2030 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.