Correlation Between JPMorgan Chase and Energy

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

Diversification Opportunities for JPMorgan Chase and Energy

0.16

Correlation Coefficient

JPMorgan Chase  Energy

Average diversification

The 3 months correlation between JPMorgan and Energy is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Energy and Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy and Water 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 Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy and Water has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Energy go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Energy

Considering the 90-day investment horizon JPMorgan Chase is expected to generate 17.74 times less return on investment than Energy. But when comparing it to its historical volatility, JPMorgan Chase Co is 13.96 times less risky than Energy. It trades about 0.11 of its potential returns per unit of risk. Energy and Water is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  0.17  in Energy and Water on December 1, 2024 and sell it today you would earn a total of  0.15  from holding Energy and Water or generate 88.24% 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.  Energy and Water

JPMorgan Chase

Risk-Adjusted Performance

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

Energy and Water

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Energy and Water are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JPMorgan Chase and Energy

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

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