Correlation Between JPMorgan Chase and Invesco DWA

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

Diversification Opportunities for JPMorgan Chase and Invesco DWA

0.27

Correlation Coefficient

JPMorgan Chase  Invesco DWA

Modest diversification

The 3 months correlation between JPMorgan and Invesco is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Invesco DWA Momentum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco DWA Momentum 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 Invesco DWA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco DWA Momentum has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Invesco DWA go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Invesco DWA

Considering the 90-day investment horizon JPMorgan Chase Co is expected to generate 1.34 times more return on investment than Invesco DWA. However, JPMorgan Chase is 1.34 times more volatile than Invesco DWA Momentum. It trades about -0.16 of its potential returns per unit of risk. Invesco DWA Momentum is currently generating about -0.27 per unit of risk. If you would invest  26,681  in JPMorgan Chase Co on December 4, 2024 and sell it today you would lose (1,828) from holding JPMorgan Chase Co or give up 6.85% of portfolio value over 90 days.

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

JPMorgan Chase Co  vs.  Invesco DWA Momentum

JPMorgan Chase

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 10 (%) 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 April 2025.

Invesco DWA Momentum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco DWA Momentum has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Etf's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Pair Trading with JPMorgan Chase and Invesco DWA

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

The idea behind JPMorgan Chase Co and Invesco DWA Momentum 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.