Correlation Between JP Morgan and Carvana Co

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Can any of the company-specific risk be diversified away by investing in both JP Morgan and Carvana Co 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 Carvana Co 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 Carvana Co Cl, you can compare the effects of market volatilities on JP Morgan and Carvana Co 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 Carvana Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of JP Morgan and Carvana Co.

Diversification Opportunities for JP Morgan and Carvana Co

0.18
  Correlation Coefficient

Average diversification

The 3 months correlation between JP Morgan and Carvana is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding JP Morgan Chase and Carvana Co Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carvana Co Cl 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 Carvana Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carvana Co Cl has no effect on the direction of JP Morgan i.e., JP Morgan and Carvana Co go up and down completely randomly.

Pair Corralation between JP Morgan and Carvana Co

Considering the 90-day investment horizon JP Morgan Chase is expected to generate 0.19 times more return on investment than Carvana Co. However, JP Morgan Chase is 5.26 times less risky than Carvana Co. It trades about -0.03 of its potential returns per unit of risk. Carvana Co Cl is currently generating about -0.04 per unit of risk. If you would invest  13,035  in JP Morgan Chase on May 14, 2022 and sell it today you would lose (1,021)  from holding JP Morgan Chase or give up 7.83% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

JP Morgan Chase  vs.  Carvana Co Cl

 Performance (%) 
       Timeline  
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 current stock price chaos, may contribute to medium-term losses for the stakeholders.

JP Morgan Price Channel

Carvana Co Cl 
Carvana Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Carvana Co Cl are ranked lower than 6 (%) 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 and Carvana Co Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JP Morgan and Carvana Co

The main advantage of trading using opposite JP Morgan and Carvana Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JP Morgan position performs unexpectedly, Carvana Co 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 Carvana Co will offset losses from the drop in Carvana Co's long position.
The idea behind JP Morgan Chase and Carvana Co Cl 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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