Correlation Between JPMorgan Chase and Pembina Pipeline

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

Diversification Opportunities for JPMorgan Chase and Pembina Pipeline

0.63

Correlation Coefficient

JPMorgan Chase  Pembina Pipeline

Poor diversification

The 3 months correlation between JPMorgan and Pembina is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Pembina Pipeline Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pembina Pipeline 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 Pembina Pipeline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pembina Pipeline Corp has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Pembina Pipeline go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Pembina Pipeline

Assuming the 90 days trading horizon JPMorgan Chase is expected to generate 1.04 times less return on investment than Pembina Pipeline. In addition to that, JPMorgan Chase is 2.03 times more volatile than Pembina Pipeline Corp. It trades about 0.09 of its total potential returns per unit of risk. Pembina Pipeline Corp is currently generating about 0.19 per unit of volatility. If you would invest  2,068  in Pembina Pipeline Corp on December 4, 2024 and sell it today you would earn a total of  157.00  from holding Pembina Pipeline Corp or generate 7.59% return on investment over 90 days.

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

JPMorgan Chase Co  vs.  Pembina Pipeline Corp

JPMorgan Chase

Risk-Adjusted Performance

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

Pembina Pipeline Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pembina Pipeline Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Pembina Pipeline may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with JPMorgan Chase and Pembina Pipeline

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

The idea behind JPMorgan Chase Co and Pembina Pipeline 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.