Correlation Between JPMorgan Chase and Coty

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

Diversification Opportunities for JPMorgan Chase and Coty

0.11

Correlation Coefficient

JPMorgan Chase  Coty

Average diversification

The 3 months correlation between JPMorgan and Coty is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Coty Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coty Inc 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 Coty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coty Inc has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Coty go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Coty

Considering the 90-day investment horizon JPMorgan Chase Co is expected to generate 0.59 times more return on investment than Coty. However, JPMorgan Chase Co is 1.68 times less risky than Coty. It trades about 0.04 of its potential returns per unit of risk. Coty Inc is currently generating about -0.14 per unit of risk. If you would invest  23,993  in JPMorgan Chase Co on December 27, 2024 and sell it today you would earn a total of  819.00  from holding JPMorgan Chase Co or generate 3.41% return on investment over 90 days.

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

JPMorgan Chase Co  vs.  Coty Inc

JPMorgan Chase

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 3 (%) 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 newest stock price disarray, may contribute to short-term losses for the investors.

Coty Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Coty Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with JPMorgan Chase and Coty

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

The idea behind JPMorgan Chase Co and Coty Inc 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.