Correlation Between JPMorgan Chase and IShares Russell

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

Diversification Opportunities for JPMorgan Chase and IShares Russell

0.69

Correlation Coefficient

JPMorgan Chase  IShares Russell

Poor diversification

The 3 months correlation between JPMorgan and IShares is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and iShares Russell Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Russell Mid 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 Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Russell Mid has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and IShares Russell go up and down completely randomly.

Pair Corralation between JPMorgan Chase and IShares Russell

Considering the 90-day investment horizon JPMorgan Chase Co is expected to generate 0.93 times more return on investment than IShares Russell. However, JPMorgan Chase Co is 1.07 times less risky than IShares Russell. It trades about 0.21 of its potential returns per unit of risk. iShares Russell Mid Cap is currently generating about 0.1 per unit of risk. If you would invest  24,184  in JPMorgan Chase Co on November 19, 2024 and sell it today you would earn a total of  3,475  from holding JPMorgan Chase Co or generate 14.37% return on investment over 90 days.

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

JPMorgan Chase Co  vs.  iShares Russell Mid Cap

JPMorgan Chase

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 16 (%) 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.

iShares Russell Mid

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Russell Mid Cap are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, IShares Russell may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with JPMorgan Chase and IShares Russell

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

The idea behind JPMorgan Chase Co and iShares Russell Mid 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.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.