Correlation Between JPMorgan Chase and Community Heritage

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

Diversification Opportunities for JPMorgan Chase and Community Heritage

0.43

Correlation Coefficient

JPMorgan Chase  Community Heritage

Very weak diversification

The 3 months correlation between JPMorgan and Community is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Community Heritage Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Heritage 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 Community Heritage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Heritage has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Community Heritage go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Community Heritage

Considering the 90-day investment horizon JPMorgan Chase is expected to generate 1.3 times less return on investment than Community Heritage. In addition to that, JPMorgan Chase is 3.02 times more volatile than Community Heritage Financial. It trades about 0.03 of its total potential returns per unit of risk. Community Heritage Financial is currently generating about 0.11 per unit of volatility. If you would invest  2,392  in Community Heritage Financial on December 30, 2024 and sell it today you would earn a total of  63.00  from holding Community Heritage Financial or generate 2.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	75.81%
Values	Daily Returns

JPMorgan Chase Co  vs.  Community Heritage Financial

JPMorgan Chase

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Community Heritage

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Community Heritage Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, Community Heritage is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with JPMorgan Chase and Community Heritage

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

The idea behind JPMorgan Chase Co and Community Heritage 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.