Correlation Between JPMorgan Chase and Open Text

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

Diversification Opportunities for JPMorgan Chase and Open Text

0.4

Correlation Coefficient

JPMorgan Chase  Open Text

Very weak diversification

The 3 months correlation between JPMorgan and Open is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Open Text Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Open Text 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 Open Text. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Open Text Corp has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Open Text go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Open Text

Assuming the 90 days trading horizon JPMorgan Chase Co is expected to generate 0.98 times more return on investment than Open Text. However, JPMorgan Chase Co is 1.02 times less risky than Open Text. It trades about 0.01 of its potential returns per unit of risk. Open Text Corp is currently generating about -0.05 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	Weak
Accuracy	100.0%
Values	Daily Returns

JPMorgan Chase Co  vs.  Open Text 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.

Open Text Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with JPMorgan Chase and Open Text

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

The idea behind JPMorgan Chase Co and Open Text 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.