Correlation Between Alibaba Group and JPMorgan Chase
Can any of the company-specific risk be diversified away by investing in both Alibaba Group and JPMorgan Chase 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 Alibaba Group and JPMorgan Chase into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alibaba Group Holding and JPMorgan Chase Co, you can compare the effects of market volatilities on Alibaba Group and JPMorgan Chase 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 Alibaba Group with a short position of JPMorgan Chase. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and JPMorgan Chase.
Diversification Opportunities for Alibaba Group and JPMorgan Chase
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alibaba and JPMorgan is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and JPMorgan Chase Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Chase and Alibaba Group 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 Alibaba Group Holding are associated (or correlated) with JPMorgan Chase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Chase has no effect on the direction of Alibaba Group i.e., Alibaba Group and JPMorgan Chase go up and down completely randomly.
Pair Corralation between Alibaba Group and JPMorgan Chase
Given the investment horizon of 90 days Alibaba Group Holding is expected to under-perform the JPMorgan Chase. In addition to that, Alibaba Group is 1.32 times more volatile than JPMorgan Chase Co. It trades about -0.25 of its total potential returns per unit of risk. JPMorgan Chase Co is currently generating about -0.03 per unit of volatility. If you would invest 24,256 in JPMorgan Chase Co on October 9, 2024 and sell it today you would lose (171.00) from holding JPMorgan Chase Co or give up 0.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alibaba Group Holding vs. JPMorgan Chase Co
Performance |
| Timeline |
| Alibaba Group Holding |
| JPMorgan Chase |
Alibaba Group and JPMorgan Chase Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and JPMorgan Chase
The main advantage of trading using opposite Alibaba Group and JPMorgan Chase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, JPMorgan Chase 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 JPMorgan Chase will offset losses from the drop in JPMorgan Chase's long position.| Alibaba Group vs. PDD Holdings | Alibaba Group vs. MercadoLibre | Alibaba Group vs. JD Inc Adr | Alibaba Group vs. Sea |
| JPMorgan Chase vs. Citigroup | JPMorgan Chase vs. Wells Fargo | JPMorgan Chase vs. Toronto Dominion Bank | JPMorgan Chase vs. Nu Holdings |
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 the Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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