Correlation Between JPMorgan Chase and CNJ Capital

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

Diversification Opportunities for JPMorgan Chase and CNJ Capital

0.0

Correlation Coefficient

JPMorgan Chase  CNJ Capital

Pay attention - limited upside

The 3 months correlation between JPMorgan and CNJ is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and CNJ Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNJ Capital Investments 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 CNJ Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNJ Capital Investments has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and CNJ Capital go up and down completely randomly.

Pair Corralation between JPMorgan Chase and CNJ Capital

Assuming the 90 days trading horizon JPMorgan Chase Co is expected to generate 1.96 times more return on investment than CNJ Capital. However, JPMorgan Chase is 1.96 times more volatile than CNJ Capital Investments. It trades about 0.09 of its potential returns per unit of risk. CNJ Capital Investments is currently generating about 0.11 per unit of risk. If you would invest  2,621  in JPMorgan Chase Co on September 23, 2024 and sell it today you would earn a total of  535.00  from holding JPMorgan Chase Co or generate 20.41% return on investment over 90 days.

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

JPMorgan Chase Co  vs.  CNJ Capital Investments

JPMorgan Chase

Risk-Adjusted Performance

8 of 100

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

CNJ Capital Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CNJ Capital Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, CNJ Capital is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with JPMorgan Chase and CNJ Capital

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

The idea behind JPMorgan Chase Co and CNJ Capital Investments 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.