Correlation Between First Trust and JPMorgan Healthcare

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

By analyzing existing cross correlation between First Trust Exchange Traded and JPMorgan Healthcare Leaders, you can compare the effects of market volatilities on First Trust and JPMorgan Healthcare 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 First Trust with a short position of JPMorgan Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and JPMorgan Healthcare.

Diversification Opportunities for First Trust and JPMorgan Healthcare

0.66

Correlation Coefficient

First Trust  JPMorgan Healthcare

Poor diversification

The 3 months correlation between First and JPMorgan is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and JPMorgan Healthcare Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Healthcare and First Trust 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 First Trust Exchange Traded are associated (or correlated) with JPMorgan Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Healthcare has no effect on the direction of First Trust i.e., First Trust and JPMorgan Healthcare go up and down completely randomly.

Pair Corralation between First Trust and JPMorgan Healthcare

Given the investment horizon of 90 days First Trust is expected to generate 21.58 times less return on investment than JPMorgan Healthcare. In addition to that, First Trust is 1.07 times more volatile than JPMorgan Healthcare Leaders. It trades about 0.0 of its total potential returns per unit of risk. JPMorgan Healthcare Leaders is currently generating about 0.04 per unit of volatility. If you would invest  4,966  in JPMorgan Healthcare Leaders on May 18, 2025 and sell it today you would earn a total of  114.00  from holding JPMorgan Healthcare Leaders or generate 2.3% return on investment over 90 days.

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

First Trust Exchange Traded  vs.  JPMorgan Healthcare Leaders

First Trust Exchange

Risk-Adjusted Performance

Weakest

Over the last 90 days First Trust Exchange Traded has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, First Trust is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

JPMorgan Healthcare

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Healthcare Leaders are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, JPMorgan Healthcare is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with First Trust and JPMorgan Healthcare

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

The idea behind First Trust Exchange Traded and JPMorgan Healthcare Leaders 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.