Correlation Between JPMorgan Chase and Verbund AG

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

Diversification Opportunities for JPMorgan Chase and Verbund AG

0.11

Correlation Coefficient

JPMorgan Chase  Verbund AG

Average diversification

The 3 months correlation between JPMorgan and Verbund is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Verbund AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verbund AG ADR 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 Verbund AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verbund AG ADR has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Verbund AG go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Verbund AG

Considering the 90-day investment horizon JPMorgan Chase is expected to generate 2.05 times less return on investment than Verbund AG. But when comparing it to its historical volatility, JPMorgan Chase Co is 2.19 times less risky than Verbund AG. It trades about 0.03 of its potential returns per unit of risk. Verbund AG ADR is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,453  in Verbund AG ADR on December 29, 2024 and sell it today you would earn a total of  32.00  from holding Verbund AG ADR or generate 2.2% return on investment over 90 days.

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

JPMorgan Chase Co  vs.  Verbund AG ADR

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.

Verbund AG ADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Verbund AG ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Verbund AG 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 Verbund AG

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

The idea behind JPMorgan Chase Co and Verbund AG ADR 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.