Correlation Between JPMorgan Chase and Dividend Select

Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and Dividend Select 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 Select 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 Select 15, you can compare the effects of market volatilities on JPMorgan Chase and Dividend Select 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 Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and Dividend Select.

Diversification Opportunities for JPMorgan Chase and Dividend Select

0.84

Correlation Coefficient

JPMorgan Chase  Dividend Select

Very poor diversification

The 3 months correlation between JPMorgan and Dividend is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Dividend Select 15 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dividend Select 15 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 Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dividend Select 15 has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Dividend Select go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Dividend Select

Assuming the 90 days trading horizon JPMorgan Chase Co is expected to under-perform the Dividend Select. In addition to that, JPMorgan Chase is 1.97 times more volatile than Dividend Select 15. It trades about -0.19 of its total potential returns per unit of risk. Dividend Select 15 is currently generating about -0.06 per unit of volatility. If you would invest  680.00  in Dividend Select 15 on September 23, 2024 and sell it today you would lose (5.00) from holding Dividend Select 15 or give up 0.74% of portfolio value over 90 days.

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

JPMorgan Chase Co  vs.  Dividend Select 15

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 Select 15

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dividend Select 15 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Dividend Select 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 Select

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

The idea behind JPMorgan Chase Co and Dividend Select 15 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.