Correlation Between JPMorgan Chase and Stone Ridge

Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and Stone Ridge 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 Stone Ridge 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 Stone Ridge 2052, you can compare the effects of market volatilities on JPMorgan Chase and Stone Ridge 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 Stone Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and Stone Ridge.

Diversification Opportunities for JPMorgan Chase and Stone Ridge

0.01

Correlation Coefficient

JPMorgan Chase  Stone Ridge

Significant diversification

The 3 months correlation between JPMorgan and Stone is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Stone Ridge 2052 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Ridge 2052 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 Stone Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Ridge 2052 has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Stone Ridge go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Stone Ridge

Considering the 90-day investment horizon JPMorgan Chase is expected to generate 1.08 times less return on investment than Stone Ridge. In addition to that, JPMorgan Chase is 3.12 times more volatile than Stone Ridge 2052. It trades about 0.03 of its total potential returns per unit of risk. Stone Ridge 2052 is currently generating about 0.1 per unit of volatility. If you would invest  18,221  in Stone Ridge 2052 on December 29, 2024 and sell it today you would earn a total of  532.22  from holding Stone Ridge 2052 or generate 2.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

JPMorgan Chase Co  vs.  Stone Ridge 2052

JPMorgan Chase

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 2 (%) 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.

Stone Ridge 2052

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stone Ridge 2052 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Stone Ridge is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with JPMorgan Chase and Stone Ridge

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

The idea behind JPMorgan Chase Co and Stone Ridge 2052 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.