Correlation Between JPMorgan Chase and ING Groep

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

Diversification Opportunities for JPMorgan Chase and ING Groep

0.81

Correlation Coefficient

JPMorgan Chase  ING Groep

Very poor diversification

The 3 months correlation between JPMorgan and ING is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and ING Groep NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ING Groep NV 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 ING Groep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ING Groep NV has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and ING Groep go up and down completely randomly.

Pair Corralation between JPMorgan Chase and ING Groep

Assuming the 90 days trading horizon JPMorgan Chase is expected to generate 5.03 times less return on investment than ING Groep. In addition to that, JPMorgan Chase is 1.41 times more volatile than ING Groep NV. It trades about 0.03 of its total potential returns per unit of risk. ING Groep NV is currently generating about 0.24 per unit of volatility. If you would invest  1,454  in ING Groep NV on December 4, 2024 and sell it today you would earn a total of  260.00  from holding ING Groep NV or generate 17.88% return on investment over 90 days.

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

JPMorgan Chase Co  vs.  ING Groep NV

JPMorgan Chase

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, JPMorgan Chase is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

ING Groep NV

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ING Groep NV are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, ING Groep reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JPMorgan Chase and ING Groep

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

The idea behind JPMorgan Chase Co and ING Groep NV 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.

Check out your portfolio center.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.