Correlation Between JPMorgan Chase and Alcoa

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

Diversification Opportunities for JPMorgan Chase and Alcoa

-0.35

Correlation Coefficient

JPMorgan Chase  Alcoa

Very good diversification

The 3 months correlation between JPMorgan and Alcoa is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Alcoa Nederland Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Nederland Holding 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 Alcoa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcoa Nederland Holding has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Alcoa go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Alcoa

Considering the 90-day investment horizon JPMorgan Chase Co is expected to generate 4.83 times more return on investment than Alcoa. However, JPMorgan Chase is 4.83 times more volatile than Alcoa Nederland Holding. It trades about 0.1 of its potential returns per unit of risk. Alcoa Nederland Holding is currently generating about -0.16 per unit of risk. If you would invest  22,343  in JPMorgan Chase Co on August 30, 2024 and sell it today you would earn a total of  2,636  from holding JPMorgan Chase Co or generate 11.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	68.25%
Values	Daily Returns

JPMorgan Chase Co  vs.  Alcoa Nederland Holding

JPMorgan Chase

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, JPMorgan Chase may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Alcoa Nederland Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alcoa Nederland Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Alcoa is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JPMorgan Chase and Alcoa

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

The idea behind JPMorgan Chase Co and Alcoa Nederland Holding 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.