Correlation Between JPMorgan Chase and Grupo Mxico

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

Diversification Opportunities for JPMorgan Chase and Grupo Mxico

-0.65

Correlation Coefficient

JPMorgan Chase  Grupo Mxico

Excellent diversification

The 3 months correlation between JPMorgan and Grupo is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Grupo Mxico SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Mxico SAB 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 Grupo Mxico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Mxico SAB has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Grupo Mxico go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Grupo Mxico

Assuming the 90 days trading horizon JPMorgan Chase Co is expected to generate 0.81 times more return on investment than Grupo Mxico. However, JPMorgan Chase Co is 1.24 times less risky than Grupo Mxico. It trades about 0.62 of its potential returns per unit of risk. Grupo Mxico SAB is currently generating about 0.16 per unit of risk. If you would invest  476,070  in JPMorgan Chase Co on October 21, 2024 and sell it today you would earn a total of  63,930  from holding JPMorgan Chase Co or generate 13.43% return on investment over 90 days.

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

JPMorgan Chase Co  vs.  Grupo Mxico SAB

JPMorgan Chase

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, JPMorgan Chase showed solid returns over the last few months and may actually be approaching a breakup point.

Grupo Mxico SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Mxico SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with JPMorgan Chase and Grupo Mxico

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

The idea behind JPMorgan Chase Co and Grupo Mxico SAB 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.