Correlation Between JPMorgan Chase and United Natural

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

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

Diversification Opportunities for JPMorgan Chase and United Natural

0.76

Correlation Coefficient

JPMorgan Chase  United Natural

Poor diversification

The 3 months correlation between JPMorgan and United is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and United Natural Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Natural Foods and JPMorgan Chase 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 Chase Co are associated (or correlated) with United Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Natural Foods has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and United Natural go up and down completely randomly.

Pair Corralation between JPMorgan Chase and United Natural

Assuming the 90 days horizon JPMorgan Chase is expected to generate 27.12 times less return on investment than United Natural. But when comparing it to its historical volatility, JPMorgan Chase Co is 7.29 times less risky than United Natural. It trades about 0.05 of its potential returns per unit of risk. United Natural Foods is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,242  in United Natural Foods on October 8, 2024 and sell it today you would earn a total of  386.00  from holding United Natural Foods or generate 17.22% return on investment over 90 days.

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

JPMorgan Chase Co  vs.  United Natural Foods

JPMorgan Chase

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, JPMorgan Chase reported solid returns over the last few months and may actually be approaching a breakup point.

United Natural Foods

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Natural Foods are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, United Natural reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JPMorgan Chase and United Natural

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

The idea behind JPMorgan Chase Co and United Natural Foods 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.