Correlation Between InfraCap MLP and JPMorgan Chase

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

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

Diversification Opportunities for InfraCap MLP and JPMorgan Chase

0.99

Correlation Coefficient

InfraCap MLP  JPMorgan Chase

No risk reduction

The 3 months correlation between InfraCap and JPMorgan is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding InfraCap MLP ETF and JPMorgan Chase Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Chase Financial and InfraCap MLP 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 InfraCap MLP ETF 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 Financial has no effect on the direction of InfraCap MLP i.e., InfraCap MLP and JPMorgan Chase go up and down completely randomly.

Pair Corralation between InfraCap MLP and JPMorgan Chase

Given the investment horizon of 90 days InfraCap MLP ETF is expected to generate 1.35 times more return on investment than JPMorgan Chase. However, InfraCap MLP is 1.35 times more volatile than JPMorgan Chase Financial. It trades about 0.24 of its potential returns per unit of risk. JPMorgan Chase Financial is currently generating about 0.25 per unit of risk. If you would invest  3,990  in InfraCap MLP ETF on September 3, 2024 and sell it today you would earn a total of  741.00  from holding InfraCap MLP ETF or generate 18.57% return on investment over 90 days.

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

InfraCap MLP ETF  vs.  JPMorgan Chase Financial

InfraCap MLP ETF

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in InfraCap MLP ETF are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, InfraCap MLP sustained solid returns over the last few months and may actually be approaching a breakup point.

JPMorgan Chase Financial

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Financial are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward-looking indicators, JPMorgan Chase sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with InfraCap MLP and JPMorgan Chase

The main advantage of trading using opposite InfraCap MLP and JPMorgan Chase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InfraCap MLP 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 InfraCap MLP ETF and JPMorgan Chase Financial 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.