Correlation Between JPMorgan Chase and INTERNATIONAL

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

Diversification Opportunities for JPMorgan Chase and INTERNATIONAL

-0.25

Correlation Coefficient

JPMorgan Chase  INTERNATIONAL

Very good diversification

The 3 months correlation between JPMorgan and INTERNATIONAL is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and INTERNATIONAL FLAVORS FRAGRANC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERNATIONAL FLAVORS 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 INTERNATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERNATIONAL FLAVORS has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and INTERNATIONAL go up and down completely randomly.

Pair Corralation between JPMorgan Chase and INTERNATIONAL

Considering the 90-day investment horizon JPMorgan Chase is expected to generate 30.46 times less return on investment than INTERNATIONAL. But when comparing it to its historical volatility, JPMorgan Chase Co is 47.5 times less risky than INTERNATIONAL. It trades about 0.09 of its potential returns per unit of risk. INTERNATIONAL FLAVORS FRAGRANCES is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  8,436  in INTERNATIONAL FLAVORS FRAGRANCES on October 7, 2024 and sell it today you would earn a total of  447.00  from holding INTERNATIONAL FLAVORS FRAGRANCES or generate 5.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.74%
Values	Daily Returns

JPMorgan Chase Co  vs.  INTERNATIONAL FLAVORS FRAGRANC

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 inconsistent basic indicators, JPMorgan Chase displayed solid returns over the last few months and may actually be approaching a breakup point.

INTERNATIONAL FLAVORS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INTERNATIONAL FLAVORS FRAGRANCES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, INTERNATIONAL 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 INTERNATIONAL

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

The idea behind JPMorgan Chase Co and INTERNATIONAL FLAVORS FRAGRANCES 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.