Correlation Between JPMorgan Chase and Houlihan Lokey
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and Houlihan Lokey 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 Houlihan Lokey 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 Houlihan Lokey, you can compare the effects of market volatilities on JPMorgan Chase and Houlihan Lokey 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 Houlihan Lokey. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and Houlihan Lokey.
Diversification Opportunities for JPMorgan Chase and Houlihan Lokey
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JPMorgan and Houlihan is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Houlihan Lokey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Houlihan Lokey 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 Houlihan Lokey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Houlihan Lokey has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Houlihan Lokey go up and down completely randomly.
Pair Corralation between JPMorgan Chase and Houlihan Lokey
Considering the 90-day investment horizon JPMorgan Chase Co is expected to generate 1.18 times more return on investment than Houlihan Lokey. However, JPMorgan Chase is 1.18 times more volatile than Houlihan Lokey. It trades about 0.1 of its potential returns per unit of risk. Houlihan Lokey is currently generating about 0.07 per unit of risk. If you would invest 18,331 in JPMorgan Chase Co on February 28, 2024 and sell it today you would earn a total of 1,619 from holding JPMorgan Chase Co or generate 8.83% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
JPMorgan Chase Co vs. Houlihan Lokey
Performance |
Timeline |
JPMorgan Chase |
Houlihan Lokey |
JPMorgan Chase and Houlihan Lokey Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with JPMorgan Chase and Houlihan Lokey
The main advantage of trading using opposite JPMorgan Chase and Houlihan Lokey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, Houlihan Lokey 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 Houlihan Lokey will offset losses from the drop in Houlihan Lokey's long position.JPMorgan Chase vs. Merck Company | JPMorgan Chase vs. MetLife Preferred Stock | JPMorgan Chase vs. MetLife Preferred Stock | JPMorgan Chase vs. Deciphera Pharmaceuticals LLC |
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Check out your portfolio center.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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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