Correlation Between JPMorgan Chase and ROK Resources

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

Diversification Opportunities for JPMorgan Chase and ROK Resources

-0.67

Correlation Coefficient

JPMorgan Chase  ROK Resources

Excellent diversification

The 3 months correlation between JPMorgan and ROK is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and ROK Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROK Resources 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 ROK Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROK Resources has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and ROK Resources go up and down completely randomly.

Pair Corralation between JPMorgan Chase and ROK Resources

Assuming the 90 days trading horizon JPMorgan Chase is expected to generate 10.42 times less return on investment than ROK Resources. But when comparing it to its historical volatility, JPMorgan Chase Co is 2.96 times less risky than ROK Resources. It trades about 0.08 of its potential returns per unit of risk. ROK Resources is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  16.00  in ROK Resources on October 12, 2024 and sell it today you would earn a total of  3.00  from holding ROK Resources or generate 18.75% return on investment over 90 days.

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

JPMorgan Chase Co  vs.  ROK Resources

JPMorgan Chase

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 8 (%) 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 February 2025.

ROK Resources

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ROK Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, ROK Resources is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with JPMorgan Chase and ROK Resources

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

The idea behind JPMorgan Chase Co and ROK Resources 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.