Correlation Between JPMORGAN and Valvoline

Can any of the company-specific risk be diversified away by investing in both JPMORGAN and Valvoline 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 and Valvoline 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 Valvoline, you can compare the effects of market volatilities on JPMORGAN and Valvoline 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 with a short position of Valvoline. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMORGAN and Valvoline.

Diversification Opportunities for JPMORGAN and Valvoline

-0.13

Correlation Coefficient

JPMORGAN  Valvoline

Good diversification

The 3 months correlation between JPMORGAN and Valvoline is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding JPMORGAN CHASE CO and Valvoline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valvoline and JPMORGAN 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 Valvoline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valvoline has no effect on the direction of JPMORGAN i.e., JPMORGAN and Valvoline go up and down completely randomly.

Pair Corralation between JPMORGAN and Valvoline

Assuming the 90 days trading horizon JPMORGAN CHASE CO is expected to generate 0.54 times more return on investment than Valvoline. However, JPMORGAN CHASE CO is 1.86 times less risky than Valvoline. It trades about -0.01 of its potential returns per unit of risk. Valvoline is currently generating about -0.02 per unit of risk. If you would invest  7,746  in JPMORGAN CHASE CO on September 2, 2024 and sell it today you would lose (59.00) from holding JPMORGAN CHASE CO or give up 0.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

JPMORGAN CHASE CO  vs.  Valvoline

JPMORGAN CHASE CO

Risk-Adjusted Performance

0 of 100

Very Weak

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

Valvoline

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valvoline has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Valvoline is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with JPMORGAN and Valvoline

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

The idea behind JPMORGAN CHASE CO and Valvoline 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.