Correlation Between JPMorgan Chase and NOV

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

Diversification Opportunities for JPMorgan Chase and NOV

0.26

Correlation Coefficient

JPMorgan Chase  NOV

Modest diversification

The 3 months correlation between JPMorgan and NOV is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and NOV Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOV Inc 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 NOV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOV Inc has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and NOV go up and down completely randomly.

Pair Corralation between JPMorgan Chase and NOV

Assuming the 90 days trading horizon JPMorgan Chase Co is expected to generate 0.94 times more return on investment than NOV. However, JPMorgan Chase Co is 1.06 times less risky than NOV. It trades about 0.09 of its potential returns per unit of risk. NOV Inc is currently generating about 0.0 per unit of risk. If you would invest  248,053  in JPMorgan Chase Co on September 24, 2024 and sell it today you would earn a total of  230,447  from holding JPMorgan Chase Co or generate 92.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

JPMorgan Chase Co  vs.  NOV Inc

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 fairly weak primary indicators, JPMorgan Chase showed solid returns over the last few months and may actually be approaching a breakup point.

NOV Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NOV Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, NOV is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JPMorgan Chase and NOV

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

The idea behind JPMorgan Chase Co and NOV Inc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.