Correlation Between JPMorgan Chase and Ecolab

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

Diversification Opportunities for JPMorgan Chase and Ecolab

-0.05
  Correlation Coefficient

Good diversification

The 3 months correlation between JPMorgan and Ecolab is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc 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 Ecolab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecolab Inc has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Ecolab go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Ecolab

Considering the 90-day investment horizon JPMorgan Chase is expected to generate 19.9 times less return on investment than Ecolab. But when comparing it to its historical volatility, JPMorgan Chase Co is 1.55 times less risky than Ecolab. It trades about 0.01 of its potential returns per unit of risk. Ecolab Inc is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  13,832  in Ecolab Inc on September 8, 2022 and sell it today you would earn a total of  1,011  from holding Ecolab Inc or generate 7.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

JPMorgan Chase Co  vs.  Ecolab Inc

 Performance (%) 
       Timeline  
JPMorgan Chase 
JPMorgan Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, JPMorgan Chase may actually be approaching a critical reversion point that can send shares even higher in January 2023.

JPMorgan Price Channel

Ecolab Inc 
Ecolab Performance
0 of 100
Over the last 90 days Ecolab Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's fundamental indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

Ecolab Price Channel

JPMorgan Chase and Ecolab Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JPMorgan Chase and Ecolab

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

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