Correlation Between JP Morgan and International Business

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

Diversification Opportunities for JP Morgan and International Business

0.28
  Correlation Coefficient

Modest diversification

The 3 months correlation between JP Morgan and International is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding JP Morgan Chase and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of JP Morgan i.e., JP Morgan and International Business go up and down completely randomly.

Pair Corralation between JP Morgan and International Business

Considering the 90-day investment horizon JP Morgan Chase is expected to generate 1.16 times more return on investment than International Business. However, JP Morgan is 1.16 times more volatile than International Business Machines. It trades about 0.02 of its potential returns per unit of risk. International Business Machines is currently generating about 0.02 per unit of risk. If you would invest  9,934  in JP Morgan Chase on July 2, 2022 and sell it today you would earn a total of  656.00  from holding JP Morgan Chase or generate 6.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

JP Morgan Chase  vs.  International Business Machine

 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 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

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

International Price Channel

JP Morgan and International Business Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JP Morgan and International Business

The main advantage of trading using opposite JP Morgan and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JP Morgan position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.
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The idea behind JP Morgan Chase and International Business Machines 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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