Correlation Between JPMorgan Chase and Apple

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

Diversification Opportunities for JPMorgan Chase and Apple

0.82

Correlation Coefficient

JPMorgan Chase  Apple

Very poor diversification

The 3 months correlation between JPMorgan and Apple is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Apple go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Apple

Assuming the 90 days trading horizon JPMorgan Chase Co is expected to generate 1.05 times more return on investment than Apple. However, JPMorgan Chase is 1.05 times more volatile than Apple Inc. It trades about 0.17 of its potential returns per unit of risk. Apple Inc is currently generating about 0.14 per unit of risk. If you would invest  7,666  in JPMorgan Chase Co on September 28, 2024 and sell it today you would earn a total of  7,389  from holding JPMorgan Chase Co or generate 96.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.63%
Values	Daily Returns

JPMorgan Chase Co  vs.  Apple Inc

JPMorgan Chase

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, JPMorgan Chase sustained solid returns over the last few months and may actually be approaching a breakup point.

Apple Inc

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Apple sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JPMorgan Chase and Apple

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

The idea behind JPMorgan Chase Co and Apple Inc 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.