Correlation Between JPMorgan Chase and Global Energy

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

Diversification Opportunities for JPMorgan Chase and Global Energy

-0.58

Correlation Coefficient

JPMorgan Chase  Global Energy

Excellent diversification

The 3 months correlation between JPMorgan and Global is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Global Energy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Energy Metals 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 Global Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Energy Metals has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Global Energy go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Global Energy

Considering the 90-day investment horizon JPMorgan Chase Co is expected to generate 0.2 times more return on investment than Global Energy. However, JPMorgan Chase Co is 4.92 times less risky than Global Energy. It trades about 0.11 of its potential returns per unit of risk. Global Energy Metals is currently generating about -0.03 per unit of risk. If you would invest  21,896  in JPMorgan Chase Co on August 31, 2024 and sell it today you would earn a total of  3,083  from holding JPMorgan Chase Co or generate 14.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

JPMorgan Chase Co  vs.  Global Energy Metals

JPMorgan Chase

Risk-Adjusted Performance

8 of 100

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 displayed solid returns over the last few months and may actually be approaching a breakup point.

Global Energy Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Energy Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with JPMorgan Chase and Global Energy

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

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