Correlation Between JPMorgan Chase and Lithium Americas

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

Diversification Opportunities for JPMorgan Chase and Lithium Americas

0.06

Correlation Coefficient

JPMorgan Chase  Lithium Americas

Significant diversification

The 3 months correlation between JPMorgan and Lithium is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Lithium Americas Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Americas Corp 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 Lithium Americas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Americas Corp has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Lithium Americas go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Lithium Americas

Assuming the 90 days trading horizon JPMorgan Chase Co is expected to generate 0.45 times more return on investment than Lithium Americas. However, JPMorgan Chase Co is 2.21 times less risky than Lithium Americas. It trades about 0.01 of its potential returns per unit of risk. Lithium Americas Corp is currently generating about -0.07 per unit of risk. If you would invest  3,201  in JPMorgan Chase Co on December 24, 2024 and sell it today you would lose (9.00) from holding JPMorgan Chase Co or give up 0.28% of portfolio value over 90 days.

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

JPMorgan Chase Co  vs.  Lithium Americas Corp

JPMorgan Chase

Risk-Adjusted Performance

Weak

Over the last 90 days JPMorgan Chase Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, JPMorgan Chase is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Lithium Americas Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lithium Americas Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with JPMorgan Chase and Lithium Americas

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

The idea behind JPMorgan Chase Co and Lithium Americas Corp 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.