Correlation Between JPMorgan Chase and Caldwell Partners

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

Diversification Opportunities for JPMorgan Chase and Caldwell Partners

-0.48

Correlation Coefficient

JPMorgan Chase  Caldwell Partners

Very good diversification

The 3 months correlation between JPMorgan and Caldwell is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and The Caldwell Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caldwell Partners 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 Caldwell Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caldwell Partners has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Caldwell Partners go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Caldwell Partners

Considering the 90-day investment horizon JPMorgan Chase Co is expected to generate 0.74 times more return on investment than Caldwell Partners. However, JPMorgan Chase Co is 1.34 times less risky than Caldwell Partners. It trades about 0.11 of its potential returns per unit of risk. The Caldwell Partners is currently generating about 0.01 per unit of risk. If you would invest  21,896  in JPMorgan Chase Co on September 1, 2024 and sell it today you would earn a total of  3,076  from holding JPMorgan Chase Co or generate 14.05% return on investment over 90 days.

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

JPMorgan Chase Co  vs.  The Caldwell Partners

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 unsteady basic indicators, JPMorgan Chase displayed solid returns over the last few months and may actually be approaching a breakup point.

Caldwell Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Caldwell Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Caldwell Partners is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with JPMorgan Chase and Caldwell Partners

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

The idea behind JPMorgan Chase Co and The Caldwell Partners 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.