Correlation Between JPMorgan Chase and Allied Gold

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

Diversification Opportunities for JPMorgan Chase and Allied Gold

-0.12

Correlation Coefficient

JPMorgan Chase  Allied Gold

Good diversification

The 3 months correlation between JPMorgan and Allied is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Allied Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Gold 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 Allied Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Gold has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Allied Gold go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Allied Gold

Assuming the 90 days trading horizon JPMorgan Chase is expected to generate 3.84 times less return on investment than Allied Gold. But when comparing it to its historical volatility, JPMorgan Chase Co is 3.22 times less risky than Allied Gold. It trades about 0.02 of its potential returns per unit of risk. Allied Gold is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  348.00  in Allied Gold on October 11, 2024 and sell it today you would earn a total of  2.00  from holding Allied Gold or generate 0.57% return on investment over 90 days.

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

JPMorgan Chase Co  vs.  Allied Gold

JPMorgan Chase

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, JPMorgan Chase may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Allied Gold

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Allied Gold are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Allied Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JPMorgan Chase and Allied Gold

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

The idea behind JPMorgan Chase Co and Allied Gold 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.