Correlation Between JPMorgan Chase and ING Group

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

Diversification Opportunities for JPMorgan Chase and ING Group

0.75

Correlation Coefficient

JPMorgan Chase  ING Group

Poor diversification

The 3 months correlation between JPMorgan and ING is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and ING Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ING Group 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 Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ING Group NV has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and ING Group go up and down completely randomly.

Pair Corralation between JPMorgan Chase and ING Group

Assuming the 90 days trading horizon JPMorgan Chase is expected to generate 10.86 times less return on investment than ING Group. But when comparing it to its historical volatility, JPMorgan Chase Co is 5.09 times less risky than ING Group. It trades about 0.13 of its potential returns per unit of risk. ING Group NV is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  1,526  in ING Group NV on December 22, 2024 and sell it today you would earn a total of  461.00  from holding ING Group NV or generate 30.21% 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.  ING Group 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 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, JPMorgan Chase is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

ING Group NV

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ING Group NV are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ING Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JPMorgan Chase and ING Group

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

The idea behind JPMorgan Chase Co and ING Group 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.