Correlation Between JPMorgan Chase and 88 Energy

Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and 88 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 88 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 88 Energy Limited, you can compare the effects of market volatilities on JPMorgan Chase and 88 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 88 Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and 88 Energy.

Diversification Opportunities for JPMorgan Chase and 88 Energy

-0.1

Correlation Coefficient

JPMorgan Chase  88 Energy

Good diversification

The 3 months correlation between JPMorgan and EEENF is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and 88 Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 88 Energy Limited 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 88 Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 88 Energy Limited has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and 88 Energy go up and down completely randomly.

Pair Corralation between JPMorgan Chase and 88 Energy

Considering the 90-day investment horizon JPMorgan Chase Co is expected to generate 0.13 times more return on investment than 88 Energy. However, JPMorgan Chase Co is 7.94 times less risky than 88 Energy. It trades about 0.57 of its potential returns per unit of risk. 88 Energy Limited is currently generating about 0.04 per unit of risk. If you would invest  23,176  in JPMorgan Chase Co on October 20, 2024 and sell it today you would earn a total of  2,740  from holding JPMorgan Chase Co or generate 11.82% 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.  88 Energy Limited

JPMorgan Chase

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days JPMorgan Chase Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak basic indicators, JPMorgan Chase displayed solid returns over the last few months and may actually be approaching a breakup point.

88 Energy Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 88 Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, 88 Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with JPMorgan Chase and 88 Energy

The main advantage of trading using opposite JPMorgan Chase and 88 Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, 88 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 88 Energy will offset losses from the drop in 88 Energy's long position.

The idea behind JPMorgan Chase Co and 88 Energy Limited 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.