Correlation Between Coca Cola and JPMorgan Chase

Can any of the company-specific risk be diversified away by investing in both Coca Cola and JPMorgan Chase 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 Coca Cola and JPMorgan Chase into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Coca Cola and JPMorgan Chase Co, you can compare the effects of market volatilities on Coca Cola and JPMorgan Chase 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 Coca Cola with a short position of JPMorgan Chase. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and JPMorgan Chase.

Diversification Opportunities for Coca Cola and JPMorgan Chase

0.07

Correlation Coefficient

Coca Cola  JPMorgan Chase

Significant diversification

The 3 months correlation between Coca and JPMorgan is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and JPMorgan Chase Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Chase and Coca Cola 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 The Coca Cola are associated (or correlated) with JPMorgan Chase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Chase has no effect on the direction of Coca Cola i.e., Coca Cola and JPMorgan Chase go up and down completely randomly.

Pair Corralation between Coca Cola and JPMorgan Chase

Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.84 times more return on investment than JPMorgan Chase. However, The Coca Cola is 1.2 times less risky than JPMorgan Chase. It trades about 0.19 of its potential returns per unit of risk. JPMorgan Chase Co is currently generating about 0.07 per unit of risk. If you would invest  6,158  in The Coca Cola on December 28, 2024 and sell it today you would earn a total of  916.00  from holding The Coca Cola or generate 14.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

The Coca Cola  vs.  JPMorgan Chase Co

Coca Cola

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Coca Cola are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Coca Cola displayed solid returns over the last few months and may actually be approaching a breakup point.

JPMorgan Chase

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 5 (%) 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 newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Coca Cola and JPMorgan Chase

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

The idea behind The Coca Cola and JPMorgan Chase Co 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.