Correlation Between JPMorgan Chase and STRATEGIC ALLOCATION

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

Diversification Opportunities for JPMorgan Chase and STRATEGIC ALLOCATION

0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between JPMorgan and STRATEGIC is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and STRATEGIC ALLOCATION AGGRESSIV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRATEGIC ALLOCATION 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 STRATEGIC ALLOCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRATEGIC ALLOCATION has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and STRATEGIC ALLOCATION go up and down completely randomly.

Pair Corralation between JPMorgan Chase and STRATEGIC ALLOCATION

Considering the 90-day investment horizon JPMorgan Chase Co is expected to generate 1.72 times more return on investment than STRATEGIC ALLOCATION. However, JPMorgan Chase is 1.72 times more volatile than STRATEGIC ALLOCATION AGGRESSIVE. It trades about 0.03 of its potential returns per unit of risk. STRATEGIC ALLOCATION AGGRESSIVE is currently generating about 0.01 per unit of risk. If you would invest  11,187  in JPMorgan Chase Co on September 4, 2022 and sell it today you would earn a total of  2,329  from holding JPMorgan Chase Co or generate 20.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.8%
ValuesDaily Returns

JPMorgan Chase Co  vs.  STRATEGIC ALLOCATION AGGRESSIV

 Performance (%) 
       Timeline  
JPMorgan Chase 
JPMorgan Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, JPMorgan Chase revealed solid returns over the last few months and may actually be approaching a breakup point.

JPMorgan Price Channel

STRATEGIC ALLOCATION 
STRATEGIC Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in STRATEGIC ALLOCATION AGGRESSIVE are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, STRATEGIC ALLOCATION may actually be approaching a critical reversion point that can send shares even higher in January 2023.

STRATEGIC Price Channel

JPMorgan Chase and STRATEGIC ALLOCATION Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JPMorgan Chase and STRATEGIC ALLOCATION

The main advantage of trading using opposite JPMorgan Chase and STRATEGIC ALLOCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, STRATEGIC ALLOCATION 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 STRATEGIC ALLOCATION will offset losses from the drop in STRATEGIC ALLOCATION's long position.
JPMorgan Chase vs. East West Bancorp
The idea behind JPMorgan Chase Co and STRATEGIC ALLOCATION AGGRESSIVE 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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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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