Correlation Between JPMorgan Chase and UNITED

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

Diversification Opportunities for JPMorgan Chase and UNITED

-0.55

Correlation Coefficient

JPMorgan Chase  UNITED

Excellent diversification

The 3 months correlation between JPMorgan and UNITED is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and UNITED TECHNOLOGIES P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED TECHNOLOGIES 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 UNITED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED TECHNOLOGIES has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and UNITED go up and down completely randomly.

Pair Corralation between JPMorgan Chase and UNITED

Considering the 90-day investment horizon JPMorgan Chase is expected to generate 1.41 times less return on investment than UNITED. In addition to that, JPMorgan Chase is 1.38 times more volatile than UNITED TECHNOLOGIES P. It trades about 0.03 of its total potential returns per unit of risk. UNITED TECHNOLOGIES P is currently generating about 0.05 per unit of volatility. If you would invest  10,391  in UNITED TECHNOLOGIES P on December 23, 2024 and sell it today you would earn a total of  232.00  from holding UNITED TECHNOLOGIES P or generate 2.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	68.85%
Values	Daily Returns

JPMorgan Chase Co  vs.  UNITED TECHNOLOGIES P

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 latest stock price disarray, may contribute to short-term losses for the investors.

UNITED TECHNOLOGIES

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UNITED TECHNOLOGIES P are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, UNITED is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JPMorgan Chase and UNITED

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

The idea behind JPMorgan Chase Co and UNITED TECHNOLOGIES P 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.