Correlation Between Champion Iron and JPMorgan Chase

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

By analyzing existing cross correlation between Champion Iron and JPMorgan Chase Co, you can compare the effects of market volatilities on Champion Iron and JPMorgan Chase 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 Champion Iron with a short position of JPMorgan Chase. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Iron and JPMorgan Chase.

Diversification Opportunities for Champion Iron and JPMorgan Chase

-0.44

Correlation Coefficient

Champion Iron  JPMorgan Chase

Very good diversification

The 3 months correlation between Champion and JPMorgan is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron and JPMorgan Chase Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Chase and Champion Iron 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 Champion Iron are associated (or correlated) with JPMorgan Chase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Chase has no effect on the direction of Champion Iron i.e., Champion Iron and JPMorgan Chase go up and down completely randomly.

Pair Corralation between Champion Iron and JPMorgan Chase

Assuming the 90 days trading horizon Champion Iron is expected to generate 21.78 times less return on investment than JPMorgan Chase. In addition to that, Champion Iron is 1.72 times more volatile than JPMorgan Chase Co. It trades about 0.0 of its total potential returns per unit of risk. JPMorgan Chase Co is currently generating about 0.1 per unit of volatility. If you would invest  1,816  in JPMorgan Chase Co on October 22, 2024 and sell it today you would earn a total of  1,626  from holding JPMorgan Chase Co or generate 89.54% return on investment over 90 days.

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

Champion Iron  vs.  JPMorgan Chase Co

Champion Iron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Champion Iron has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Champion Iron is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

JPMorgan Chase

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, JPMorgan Chase displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Champion Iron and JPMorgan Chase

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

The idea behind Champion Iron and JPMorgan Chase Co 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.