Correlation Between JPMorgan Chase and Apple

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

Diversification Opportunities for JPMorgan Chase and Apple

-0.57

Correlation Coefficient

JPMorgan Chase  Apple

Excellent diversification

The 3 months correlation between JPMorgan and Apple is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Apple Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc CDR 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc CDR has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Apple go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Apple

Assuming the 90 days trading horizon JPMorgan Chase is expected to generate 1.82 times less return on investment than Apple. But when comparing it to its historical volatility, JPMorgan Chase Co is 1.12 times less risky than Apple. It trades about 0.03 of its potential returns per unit of risk. Apple Inc CDR is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,441  in Apple Inc CDR on November 28, 2024 and sell it today you would earn a total of  151.00  from holding Apple Inc CDR or generate 4.39% return on investment over 90 days.

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

JPMorgan Chase Co  vs.  Apple Inc CDR

JPMorgan Chase

Risk-Adjusted Performance

Weak

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 very healthy basic indicators, JPMorgan Chase is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Apple Inc CDR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Apple is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with JPMorgan Chase and Apple

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

The idea behind JPMorgan Chase Co and Apple Inc CDR 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.