Correlation Between JPMorgan Chase and ProShares Russell

Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and ProShares 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 ProShares 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 ProShares Russell 2000, you can compare the effects of market volatilities on JPMorgan Chase and ProShares 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 ProShares Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and ProShares Russell.

Diversification Opportunities for JPMorgan Chase and ProShares Russell

0.81

Correlation Coefficient

JPMorgan Chase  ProShares Russell

Very poor diversification

The 3 months correlation between JPMorgan and ProShares is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and ProShares Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Russell 2000 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 ProShares Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Russell 2000 has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and ProShares Russell go up and down completely randomly.

Pair Corralation between JPMorgan Chase and ProShares Russell

Considering the 90-day investment horizon JPMorgan Chase Co is expected to generate 1.55 times more return on investment than ProShares Russell. However, JPMorgan Chase is 1.55 times more volatile than ProShares Russell 2000. It trades about 0.03 of its potential returns per unit of risk. ProShares Russell 2000 is currently generating about -0.04 per unit of risk. If you would invest  23,809  in JPMorgan Chase Co on December 29, 2024 and sell it today you would earn a total of  476.00  from holding JPMorgan Chase Co or generate 2.0% 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.  ProShares Russell 2000

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.

ProShares Russell 2000

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Russell 2000 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, ProShares Russell is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with JPMorgan Chase and ProShares Russell

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

The idea behind JPMorgan Chase Co and ProShares Russell 2000 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.