Correlation Between JPMorgan Diversified and PIMCO RAFI

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

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

Diversification Opportunities for JPMorgan Diversified and PIMCO RAFI

0.98

Correlation Coefficient

JPMorgan Diversified  PIMCO RAFI

Almost no diversification

The 3 months correlation between JPMorgan and PIMCO is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Diversified Return and PIMCO RAFI Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO RAFI Dynamic and JPMorgan Diversified 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 Diversified Return are associated (or correlated) with PIMCO RAFI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO RAFI Dynamic has no effect on the direction of JPMorgan Diversified i.e., JPMorgan Diversified and PIMCO RAFI go up and down completely randomly.

Pair Corralation between JPMorgan Diversified and PIMCO RAFI

Given the investment horizon of 90 days JPMorgan Diversified Return is expected to generate 1.52 times more return on investment than PIMCO RAFI. However, JPMorgan Diversified is 1.52 times more volatile than PIMCO RAFI Dynamic. It trades about 0.13 of its potential returns per unit of risk. PIMCO RAFI Dynamic is currently generating about 0.16 per unit of risk. If you would invest  4,227  in JPMorgan Diversified Return on May 6, 2025 and sell it today you would earn a total of  364.00  from holding JPMorgan Diversified Return or generate 8.61% return on investment over 90 days.

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

JPMorgan Diversified Return  vs.  PIMCO RAFI Dynamic

JPMorgan Diversified

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Diversified Return are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, JPMorgan Diversified may actually be approaching a critical reversion point that can send shares even higher in September 2025.

PIMCO RAFI Dynamic

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO RAFI Dynamic are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, PIMCO RAFI may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with JPMorgan Diversified and PIMCO RAFI

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

The idea behind JPMorgan Diversified Return and PIMCO RAFI Dynamic 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.