Correlation Between JPMorgan Chase and DAIMLERCHRYSLER

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

Diversification Opportunities for JPMorgan Chase and DAIMLERCHRYSLER

-0.5

Correlation Coefficient

JPMorgan Chase  DAIMLERCHRYSLER

Very good diversification

The 3 months correlation between JPMorgan and DAIMLERCHRYSLER is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and DAIMLERCHRYSLER NORTH AMER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAIMLERCHRYSLER NORTH 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 DAIMLERCHRYSLER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAIMLERCHRYSLER NORTH has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and DAIMLERCHRYSLER go up and down completely randomly.

Pair Corralation between JPMorgan Chase and DAIMLERCHRYSLER

Considering the 90-day investment horizon JPMorgan Chase Co is expected to generate 1.87 times more return on investment than DAIMLERCHRYSLER. However, JPMorgan Chase is 1.87 times more volatile than DAIMLERCHRYSLER NORTH AMER. It trades about 0.13 of its potential returns per unit of risk. DAIMLERCHRYSLER NORTH AMER is currently generating about 0.07 per unit of risk. If you would invest  21,093  in JPMorgan Chase Co on October 6, 2024 and sell it today you would earn a total of  3,235  from holding JPMorgan Chase Co or generate 15.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

JPMorgan Chase Co  vs.  DAIMLERCHRYSLER NORTH AMER

JPMorgan Chase

Risk-Adjusted Performance

10 of 100

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 displayed solid returns over the last few months and may actually be approaching a breakup point.

DAIMLERCHRYSLER NORTH

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DAIMLERCHRYSLER NORTH AMER are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, DAIMLERCHRYSLER is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JPMorgan Chase and DAIMLERCHRYSLER

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

The idea behind JPMorgan Chase Co and DAIMLERCHRYSLER NORTH AMER 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.