Correlation Between JPMorgan Chase and IShares Morningstar

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

Diversification Opportunities for JPMorgan Chase and IShares Morningstar

0.8

Correlation Coefficient

JPMorgan Chase  IShares Morningstar

Very poor diversification

The 3 months correlation between JPMorgan and IShares is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and iShares Morningstar Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Morningstar 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 IShares Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Morningstar has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and IShares Morningstar go up and down completely randomly.

Pair Corralation between JPMorgan Chase and IShares Morningstar

Considering the 90-day investment horizon JPMorgan Chase Co is expected to generate 1.17 times more return on investment than IShares Morningstar. However, JPMorgan Chase is 1.17 times more volatile than iShares Morningstar Small Cap. It trades about 0.1 of its potential returns per unit of risk. iShares Morningstar Small Cap is currently generating about 0.04 per unit of risk. If you would invest  12,839  in JPMorgan Chase Co on October 11, 2024 and sell it today you would earn a total of  11,474  from holding JPMorgan Chase Co or generate 89.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

JPMorgan Chase Co  vs.  iShares Morningstar Small Cap

JPMorgan Chase

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 7 (%) 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 February 2025.

iShares Morningstar

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Morningstar Small Cap are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, IShares Morningstar is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JPMorgan Chase and IShares Morningstar

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

The idea behind JPMorgan Chase Co and iShares Morningstar Small Cap 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.