Correlation Between JPMorgan Chase and FirstService Corp

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

Diversification Opportunities for JPMorgan Chase and FirstService Corp

0.83

Correlation Coefficient

JPMorgan Chase  FirstService Corp

Very poor diversification

The 3 months correlation between JPMorgan and FirstService is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and FirstService Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstService Corp 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 FirstService Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstService Corp has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and FirstService Corp go up and down completely randomly.

Pair Corralation between JPMorgan Chase and FirstService Corp

Assuming the 90 days trading horizon JPMorgan Chase Co is expected to generate 2.08 times more return on investment than FirstService Corp. However, JPMorgan Chase is 2.08 times more volatile than FirstService Corp. It trades about 0.11 of its potential returns per unit of risk. FirstService Corp is currently generating about 0.2 per unit of risk. If you would invest  2,922  in JPMorgan Chase Co on September 2, 2024 and sell it today you would earn a total of  422.00  from holding JPMorgan Chase Co or generate 14.44% return on investment over 90 days.

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

JPMorgan Chase Co  vs.  FirstService Corp

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.

FirstService Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FirstService Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, FirstService Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with JPMorgan Chase and FirstService Corp

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

The idea behind JPMorgan Chase Co and FirstService Corp 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 Transaction History module to view history of all your transactions and understand their impact on performance.