Correlation Between JPMorgan Chase and Solution Financial

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

Diversification Opportunities for JPMorgan Chase and Solution Financial

-0.22

Correlation Coefficient

JPMorgan Chase  Solution Financial

Very good diversification

The 3 months correlation between JPMorgan and Solution is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Solution Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solution Financial 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 Solution Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solution Financial has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Solution Financial go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Solution Financial

Assuming the 90 days trading horizon JPMorgan Chase Co is expected to generate 0.8 times more return on investment than Solution Financial. However, JPMorgan Chase Co is 1.25 times less risky than Solution Financial. It trades about 0.15 of its potential returns per unit of risk. Solution Financial is currently generating about 0.01 per unit of risk. If you would invest  2,942  in JPMorgan Chase Co on October 25, 2024 and sell it today you would earn a total of  544.00  from holding JPMorgan Chase Co or generate 18.49% return on investment over 90 days.

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

JPMorgan Chase Co  vs.  Solution Financial

JPMorgan Chase

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, JPMorgan Chase displayed solid returns over the last few months and may actually be approaching a breakup point.

Solution Financial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with JPMorgan Chase and Solution Financial

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

The idea behind JPMorgan Chase Co and Solution Financial 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.