Correlation Between JPMorgan Chase and ProShares UltraPro

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

Diversification Opportunities for JPMorgan Chase and ProShares UltraPro

0.68

Correlation Coefficient

JPMorgan Chase  ProShares UltraPro

Poor diversification

The 3 months correlation between JPMorgan and ProShares is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and ProShares UltraPro Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraPro Short 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 UltraPro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraPro Short has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and ProShares UltraPro go up and down completely randomly.

Pair Corralation between JPMorgan Chase and ProShares UltraPro

Considering the 90-day investment horizon JPMorgan Chase is expected to generate 1.82 times less return on investment than ProShares UltraPro. But when comparing it to its historical volatility, JPMorgan Chase Co is 1.38 times less risky than ProShares UltraPro. It trades about 0.12 of its potential returns per unit of risk. ProShares UltraPro Short is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  5,792  in ProShares UltraPro Short on September 19, 2024 and sell it today you would earn a total of  1,637  from holding ProShares UltraPro Short or generate 28.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

JPMorgan Chase Co  vs.  ProShares UltraPro Short

JPMorgan Chase

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 9 (%) 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.

ProShares UltraPro Short

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares UltraPro Short are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, ProShares UltraPro unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JPMorgan Chase and ProShares UltraPro

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

The idea behind JPMorgan Chase Co and ProShares UltraPro Short 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.