Correlation Between JPMorgan Chase and First Capital

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

Diversification Opportunities for JPMorgan Chase and First Capital

-0.14

Correlation Coefficient

JPMorgan Chase  First Capital

Good diversification

The 3 months correlation between JPMorgan and First is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and First Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Capital 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 First Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Capital has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and First Capital go up and down completely randomly.

Pair Corralation between JPMorgan Chase and First Capital

Considering the 90-day investment horizon JPMorgan Chase is expected to generate 3.18 times less return on investment than First Capital. But when comparing it to its historical volatility, JPMorgan Chase Co is 1.12 times less risky than First Capital. It trades about 0.07 of its potential returns per unit of risk. First Capital is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  3,176  in First Capital on December 28, 2024 and sell it today you would earn a total of  644.00  from holding First Capital or generate 20.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

JPMorgan Chase Co  vs.  First Capital

JPMorgan Chase

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 5 (%) 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.

First Capital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Capital are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, First Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JPMorgan Chase and First Capital

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

The idea behind JPMorgan Chase Co and First Capital 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.