Correlation Between JPMorgan International and Nuveen California

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

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

Diversification Opportunities for JPMorgan International and Nuveen California

0.63

Correlation Coefficient

JPMorgan International  Nuveen California

Poor diversification

The 3 months correlation between JPMorgan and Nuveen is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan International Value and Nuveen California Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen California Select and JPMorgan International 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 International Value are associated (or correlated) with Nuveen California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen California Select has no effect on the direction of JPMorgan International i.e., JPMorgan International and Nuveen California go up and down completely randomly.

Pair Corralation between JPMorgan International and Nuveen California

Given the investment horizon of 90 days JPMorgan International Value is expected to under-perform the Nuveen California. In addition to that, JPMorgan International is 1.43 times more volatile than Nuveen California Select. It trades about -0.16 of its total potential returns per unit of risk. Nuveen California Select is currently generating about -0.13 per unit of volatility. If you would invest  1,388  in Nuveen California Select on August 13, 2024 and sell it today you would lose (26.00) from holding Nuveen California Select or give up 1.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

JPMorgan International Value  vs.  Nuveen California Select

JPMorgan International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan International Value are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, JPMorgan International is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Nuveen California Select

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with JPMorgan International and Nuveen California

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

The idea behind JPMorgan International Value and Nuveen California Select 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.