Correlation Between JP Morgan and Exxon

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Can any of the company-specific risk be diversified away by investing in both JP Morgan and Exxon 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 JP Morgan and Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JP Morgan Chase and Exxon Mobil Corp, you can compare the effects of market volatilities on JP Morgan and Exxon 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 JP Morgan with a short position of Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of JP Morgan and Exxon.

Diversification Opportunities for JP Morgan and Exxon

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between JP Morgan and Exxon is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding JP Morgan Chase and Exxon Mobil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil Corp and JP Morgan 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 JP Morgan Chase are associated (or correlated) with Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil Corp has no effect on the direction of JP Morgan i.e., JP Morgan and Exxon go up and down completely randomly.

Pair Corralation between JP Morgan and Exxon

Considering the 90-day investment horizon JP Morgan is expected to generate 7.33 times less return on investment than Exxon. But when comparing it to its historical volatility, JP Morgan Chase is 1.27 times less risky than Exxon. It trades about 0.02 of its potential returns per unit of risk. Exxon Mobil Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,161  in Exxon Mobil Corp on July 1, 2022 and sell it today you would earn a total of  5,631  from holding Exxon Mobil Corp or generate 178.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

JP Morgan Chase  vs.  Exxon Mobil Corp

 Performance (%) 
       Timeline  
JP Morgan Chase 
JP Morgan Performance
0 of 100
Over the last 90 days JP Morgan Chase has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, JP Morgan is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

JP Morgan Price Channel

Exxon Mobil Corp 
Exxon Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady basic indicators, Exxon is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Exxon Price Channel

JP Morgan and Exxon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JP Morgan and Exxon

The main advantage of trading using opposite JP Morgan and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JP Morgan position performs unexpectedly, Exxon 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 Exxon will offset losses from the drop in Exxon's long position.
JP Morgan vs. Amazon Inc
The idea behind JP Morgan Chase and Exxon Mobil 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.
Exxon vs. Chevron Corp
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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