Correlation Between JPMorgan Chase and Canoe EIT

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

Diversification Opportunities for JPMorgan Chase and Canoe EIT

0.95

Correlation Coefficient

JPMorgan Chase  Canoe EIT

Almost no diversification

The 3 months correlation between JPMorgan and Canoe is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Canoe EIT Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canoe EIT Income 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 Canoe EIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canoe EIT Income has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Canoe EIT go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Canoe EIT

Assuming the 90 days trading horizon JPMorgan Chase Co is expected to generate 3.63 times more return on investment than Canoe EIT. However, JPMorgan Chase is 3.63 times more volatile than Canoe EIT Income. It trades about 0.15 of its potential returns per unit of risk. Canoe EIT Income is currently generating about 0.3 per unit of risk. If you would invest  2,709  in JPMorgan Chase Co on September 13, 2024 and sell it today you would earn a total of  505.00  from holding JPMorgan Chase Co or generate 18.64% 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.  Canoe EIT Income

JPMorgan Chase

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 11 (%) 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.

Canoe EIT Income

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Canoe EIT Income are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Canoe EIT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with JPMorgan Chase and Canoe EIT

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

The idea behind JPMorgan Chase Co and Canoe EIT Income 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.