Correlation Between JPMorgan Chase and Dividend Growth

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

Diversification Opportunities for JPMorgan Chase and Dividend Growth

0.9

Correlation Coefficient

JPMorgan Chase  Dividend Growth

Almost no diversification

The 3 months correlation between JPMorgan and Dividend is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Dividend Growth Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dividend Growth Split 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 Dividend Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dividend Growth Split has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Dividend Growth go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Dividend Growth

Assuming the 90 days trading horizon JPMorgan Chase Co is expected to generate 2.25 times more return on investment than Dividend Growth. However, JPMorgan Chase is 2.25 times more volatile than Dividend Growth Split. It trades about 0.1 of its potential returns per unit of risk. Dividend Growth Split is currently generating about 0.1 per unit of risk. If you would invest  2,802  in JPMorgan Chase Co on September 23, 2024 and sell it today you would earn a total of  354.00  from holding JPMorgan Chase Co or generate 12.63% return on investment over 90 days.

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

JPMorgan Chase Co  vs.  Dividend Growth Split

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.

Dividend Growth Split

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dividend Growth Split are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Dividend Growth is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with JPMorgan Chase and Dividend Growth

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

The idea behind JPMorgan Chase Co and Dividend Growth Split 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.