Correlation Between Carvana Co and JP Morgan

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Carvana Co and JP Morgan 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 Carvana Co and JP Morgan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carvana Co Cl and JP Morgan Chase, you can compare the effects of market volatilities on Carvana Co and JP Morgan 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 Carvana Co with a short position of JP Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carvana Co and JP Morgan.

Diversification Opportunities for Carvana Co and JP Morgan

0.22
  Correlation Coefficient

Modest diversification

The 3 months correlation between Carvana and JP Morgan is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Carvana Co Cl and JP Morgan Chase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JP Morgan Chase and Carvana Co 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 Carvana Co Cl are associated (or correlated) with JP Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JP Morgan Chase has no effect on the direction of Carvana Co i.e., Carvana Co and JP Morgan go up and down completely randomly.

Pair Corralation between Carvana Co and JP Morgan

Given the investment horizon of 90 days Carvana Co Cl is expected to under-perform the JP Morgan. In addition to that, Carvana Co is 4.23 times more volatile than JP Morgan Chase. It trades about -0.06 of its total potential returns per unit of risk. JP Morgan Chase is currently generating about -0.03 per unit of volatility. If you would invest  14,674  in JP Morgan Chase on May 18, 2022 and sell it today you would lose (2,428)  from holding JP Morgan Chase or give up 16.55% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Carvana Co Cl  vs.  JP Morgan Chase

 Performance (%) 
       Timeline  
Carvana Co Cl 
Carvana Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Carvana Co Cl are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Carvana Co sustained solid returns over the last few months and may actually be approaching a breakup point.

Carvana Price Channel

JP Morgan Chase 
JP Morgan Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in JP Morgan Chase are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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

Carvana Co and JP Morgan Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Carvana Co and JP Morgan

The main advantage of trading using opposite Carvana Co and JP Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carvana Co position performs unexpectedly, JP Morgan 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 JP Morgan will offset losses from the drop in JP Morgan's long position.
The idea behind Carvana Co Cl and JP Morgan Chase 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

Other Complementary Tools

Money Managers
Screen money managers from public funds and ETFs managed around the world
Go
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Go
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Go
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Go
Analyst Recommendations
Analyst recommendations and target price estimates broken down by several categories
Go