Correlation Between JPMorgan Equity and AdvisorShares STAR

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Can any of the company-specific risk be diversified away by investing in both JPMorgan Equity and AdvisorShares STAR 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 Equity and AdvisorShares STAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JPMorgan Equity Premium and AdvisorShares STAR Global, you can compare the effects of market volatilities on JPMorgan Equity and AdvisorShares STAR 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 Equity with a short position of AdvisorShares STAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Equity and AdvisorShares STAR.

Diversification Opportunities for JPMorgan Equity and AdvisorShares STAR

0.98
  Correlation Coefficient

Almost no diversification

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

Pair Corralation between JPMorgan Equity and AdvisorShares STAR

Given the investment horizon of 90 days JPMorgan Equity is expected to generate 1.41 times less return on investment than AdvisorShares STAR. But when comparing it to its historical volatility, JPMorgan Equity Premium is 1.18 times less risky than AdvisorShares STAR. It trades about 0.26 of its potential returns per unit of risk. AdvisorShares STAR Global is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  4,277  in AdvisorShares STAR Global on April 25, 2025 and sell it today you would earn a total of  404.00  from holding AdvisorShares STAR Global or generate 9.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy98.39%
ValuesDaily Returns

JPMorgan Equity Premium  vs.  AdvisorShares STAR Global

 Performance 
       Timeline  
JPMorgan Equity Premium 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Equity Premium are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, JPMorgan Equity may actually be approaching a critical reversion point that can send shares even higher in August 2025.
AdvisorShares STAR Global 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in AdvisorShares STAR Global are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, AdvisorShares STAR may actually be approaching a critical reversion point that can send shares even higher in August 2025.

JPMorgan Equity and AdvisorShares STAR Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JPMorgan Equity and AdvisorShares STAR

The main advantage of trading using opposite JPMorgan Equity and AdvisorShares STAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Equity position performs unexpectedly, AdvisorShares STAR 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 AdvisorShares STAR will offset losses from the drop in AdvisorShares STAR's long position.
The idea behind JPMorgan Equity Premium and AdvisorShares STAR Global 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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