Correlation Between FT Cboe and Jpmorgan Equity

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

By analyzing existing cross correlation between FT Cboe Vest and Jpmorgan Equity Index, you can compare the effects of market volatilities on FT Cboe and Jpmorgan Equity 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 FT Cboe with a short position of Jpmorgan Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Cboe and Jpmorgan Equity.

Diversification Opportunities for FT Cboe and Jpmorgan Equity

0.89

Correlation Coefficient

FT Cboe  Jpmorgan Equity

Very poor diversification

The 3 months correlation between KNG and Jpmorgan is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding FT Cboe Vest and Jpmorgan Equity Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Equity Index and FT Cboe 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 FT Cboe Vest are associated (or correlated) with Jpmorgan Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Equity Index has no effect on the direction of FT Cboe i.e., FT Cboe and Jpmorgan Equity go up and down completely randomly.

Pair Corralation between FT Cboe and Jpmorgan Equity

Considering the 90-day investment horizon FT Cboe is expected to generate 2.91 times less return on investment than Jpmorgan Equity. But when comparing it to its historical volatility, FT Cboe Vest is 1.05 times less risky than Jpmorgan Equity. It trades about 0.1 of its potential returns per unit of risk. Jpmorgan Equity Index is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  8,385  in Jpmorgan Equity Index on May 7, 2025 and sell it today you would earn a total of  1,103  from holding Jpmorgan Equity Index or generate 13.15% return on investment over 90 days.

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

FT Cboe Vest  vs.  Jpmorgan Equity Index

FT Cboe Vest

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FT Cboe Vest are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, FT Cboe is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Jpmorgan Equity Index

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Equity Index are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Jpmorgan Equity showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FT Cboe and Jpmorgan Equity

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

The idea behind FT Cboe Vest and Jpmorgan Equity Index 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.