Correlation Between JPMorgan Chase and Virgin

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

Diversification Opportunities for JPMorgan Chase and Virgin

0.51

Correlation Coefficient

JPMorgan Chase  Virgin

Very weak diversification

The 3 months correlation between JPMorgan and Virgin is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Virgin Media Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virgin Media Communi 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 Virgin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virgin Media Communi has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Virgin go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Virgin

Considering the 90-day investment horizon JPMorgan Chase is expected to generate 12.25 times less return on investment than Virgin. But when comparing it to its historical volatility, JPMorgan Chase Co is 34.03 times less risky than Virgin. It trades about 0.12 of its potential returns per unit of risk. Virgin Media Communications is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  7,849  in Virgin Media Communications on December 2, 2024 and sell it today you would earn a total of  851.00  from holding Virgin Media Communications or generate 10.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.13%
Values	Daily Returns

JPMorgan Chase Co  vs.  Virgin Media Communications

JPMorgan Chase

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, JPMorgan Chase may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Virgin Media Communi

Risk-Adjusted Performance

Insignificant

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

Pair Trading with JPMorgan Chase and Virgin

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

The idea behind JPMorgan Chase Co and Virgin Media Communications 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.