Correlation Between JPMorgan Chase and Arconic

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

Diversification Opportunities for JPMorgan Chase and Arconic

0.66

Correlation Coefficient

JPMorgan Chase  Arconic

Poor diversification

The 3 months correlation between JPMorgan and Arconic is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Arconic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arconic 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 Arconic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arconic has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Arconic go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Arconic

If you would invest  24,228  in JPMorgan Chase Co on October 12, 2024 and sell it today you would earn a total of  85.00  from holding JPMorgan Chase Co or generate 0.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	5.0%
Values	Daily Returns

JPMorgan Chase Co  vs.  Arconic

JPMorgan Chase

Risk-Adjusted Performance

7 of 100

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

Arconic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arconic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Arconic is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with JPMorgan Chase and Arconic

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

The idea behind JPMorgan Chase Co and Arconic 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.