Correlation Between JPMorgan Chase and EURN Old

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

Diversification Opportunities for JPMorgan Chase and EURN Old

0.82

Correlation Coefficient

JPMorgan Chase  EURN Old

Very poor diversification

The 3 months correlation between JPMorgan and EURN is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and EURN Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EURN Old 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 EURN Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EURN Old has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and EURN Old go up and down completely randomly.

Pair Corralation between JPMorgan Chase and EURN Old

If you would invest  24,256  in JPMorgan Chase Co on October 10, 2024 and sell it today you would earn a total of  61.00  from holding JPMorgan Chase Co or generate 0.25% return on investment over 90 days.

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

JPMorgan Chase Co  vs.  EURN Old

JPMorgan Chase

Risk-Adjusted Performance

10 of 100

OK

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

EURN Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EURN Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, EURN Old is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with JPMorgan Chase and EURN Old

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

The idea behind JPMorgan Chase Co and EURN Old 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.