Correlation Between JP Morgan and Ford

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

Diversification Opportunities for JP Morgan and Ford

0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between JP Morgan and Ford is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding JP Morgan Chase and Ford Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor 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 Ford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ford Motor has no effect on the direction of JP Morgan i.e., JP Morgan and Ford go up and down completely randomly.

Pair Corralation between JP Morgan and Ford

Considering the 90-day investment horizon JP Morgan Chase is expected to generate 0.57 times more return on investment than Ford. However, JP Morgan Chase is 1.77 times less risky than Ford. It trades about -0.38 of its potential returns per unit of risk. Ford Motor is currently generating about -0.27 per unit of risk. If you would invest  12,973  in JP Morgan Chase on April 6, 2022 and sell it today you would lose (1,711)  from holding JP Morgan Chase or give up 13.19% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

JP Morgan Chase  vs.  Ford Motor

 Performance (%) 
      Timeline 
JP Morgan Chase 
JP Morgan Performance
0 of 100
Over the last 90 days JP Morgan Chase has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively steady which may send shares a bit higher in August 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0351
Payout Ratio
0.3
Last Split Factor
3:2
Forward Annual Dividend Rate
4.0
Dividend Date
2022-07-31
Ex Dividend Date
2022-07-05
Last Split Date
2000-06-12

JP Morgan Price Channel

Ford Motor 
Ford Performance
0 of 100
Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in August 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0353
Payout Ratio
0.23
Last Split Factor
1748175:10
Forward Annual Dividend Rate
0.4
Dividend Date
2022-06-01
Ex Dividend Date
2022-04-25
Last Split Date
2000-08-03

Ford Price Channel

JP Morgan and Ford Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with JP Morgan and Ford

The main advantage of trading using opposite JP Morgan and Ford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JP Morgan position performs unexpectedly, Ford 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 Ford will offset losses from the drop in Ford's long position.
The idea behind JP Morgan Chase and Ford Motor 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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