Correlation Between First Trust and JPMorgan Fundamental

Can any of the company-specific risk be diversified away by investing in both First Trust and JPMorgan Fundamental 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 Fundamental 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 Fundamental Data, you can compare the effects of market volatilities on First Trust and JPMorgan Fundamental 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 Fundamental. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and JPMorgan Fundamental.

Diversification Opportunities for First Trust and JPMorgan Fundamental

0.98

Correlation Coefficient

First Trust  JPMorgan Fundamental

Almost no diversification

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

Pair Corralation between First Trust and JPMorgan Fundamental

Given the investment horizon of 90 days First Trust is expected to generate 1.38 times less return on investment than JPMorgan Fundamental. But when comparing it to its historical volatility, First Trust Exchange Traded is 2.83 times less risky than JPMorgan Fundamental. It trades about 0.09 of its potential returns per unit of risk. JPMorgan Fundamental Data is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,968  in JPMorgan Fundamental Data on March 7, 2025 and sell it today you would earn a total of  505.00  from holding JPMorgan Fundamental Data or generate 10.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	42.11%
Values	Daily Returns

First Trust Exchange Traded  vs.  JPMorgan Fundamental Data

First Trust Exchange

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Exchange Traded are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, First Trust is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

JPMorgan Fundamental Data

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Fundamental Data are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, JPMorgan Fundamental is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with First Trust and JPMorgan Fundamental

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

The idea behind First Trust Exchange Traded and JPMorgan Fundamental Data 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.