Correlation Between Imedia Brands and JP Morgan

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

Diversification Opportunities for Imedia Brands and JP Morgan

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Imedia and JP Morgan is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Imedia Brands 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 Imedia Brands 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 Imedia Brands 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 Imedia Brands i.e., Imedia Brands and JP Morgan go up and down completely randomly.

Pair Corralation between Imedia Brands and JP Morgan

Given the investment horizon of 90 days Imedia Brands is expected to under-perform the JP Morgan. In addition to that, Imedia Brands is 2.82 times more volatile than JP Morgan Chase. It trades about -0.04 of its total potential returns per unit of risk. JP Morgan Chase is currently generating about 0.04 per unit of volatility. If you would invest  9,501  in JP Morgan Chase on May 17, 2022 and sell it today you would earn a total of  2,745  from holding JP Morgan Chase or generate 28.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Imedia Brands  vs.  JP Morgan Chase

 Performance (%) 
       Timeline  
Imedia Brands 
Imedia Performance
0 of 100
Over the last 90 days Imedia Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in September 2022. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Imedia Price Channel

JP Morgan Chase 
JP Morgan Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in JP Morgan Chase are ranked lower than 1 (%) 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

Imedia Brands and JP Morgan Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Imedia Brands and JP Morgan

The main advantage of trading using opposite Imedia Brands and JP Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imedia Brands 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 Imedia Brands 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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