Correlation Between JPMorgan Chase and Brookfield Investments

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

Diversification Opportunities for JPMorgan Chase and Brookfield Investments

0.47

Correlation Coefficient

JPMorgan Chase  Brookfield Investments

Very weak diversification

The 3 months correlation between JPMorgan and Brookfield is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Brookfield Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Investments 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 Brookfield Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Investments has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Brookfield Investments go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Brookfield Investments

Assuming the 90 days trading horizon JPMorgan Chase Co is expected to under-perform the Brookfield Investments. In addition to that, JPMorgan Chase is 4.53 times more volatile than Brookfield Investments. It trades about -0.13 of its total potential returns per unit of risk. Brookfield Investments is currently generating about 0.18 per unit of volatility. If you would invest  2,500  in Brookfield Investments on September 21, 2024 and sell it today you would earn a total of  14.00  from holding Brookfield Investments or generate 0.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	54.55%
Values	Daily Returns

JPMorgan Chase Co  vs.  Brookfield Investments

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 weak basic indicators, JPMorgan Chase may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Brookfield Investments

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Investments are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Brookfield Investments is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JPMorgan Chase and Brookfield Investments

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

The idea behind JPMorgan Chase Co and Brookfield Investments 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.