Correlation Between Dow Jones and JPMorgan Chase
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and JPMorgan Chase into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and JPMorgan Chase Co, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of JPMorgan Chase. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and JPMorgan Chase.
Diversification Opportunities for Dow Jones and JPMorgan Chase
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and JPMorgan is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and JPMorgan Chase Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Chase and Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and JPMorgan Chase go up and down completely randomly.
Pair Corralation between Dow Jones and JPMorgan Chase
Assuming the 90 days trading horizon Dow Jones is expected to generate 3.33 times less return on investment than JPMorgan Chase. But when comparing it to its historical volatility, Dow Jones Industrial is 2.88 times less risky than JPMorgan Chase. It trades about 0.21 of its potential returns per unit of risk. JPMorgan Chase Co is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 20,665 in JPMorgan Chase Co on August 25, 2024 and sell it today you would earn a total of 3,175 from holding JPMorgan Chase Co or generate 15.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. JPMorgan Chase Co
Performance |
| Timeline |
Dow Jones and JPMorgan Chase Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
JPMorgan Chase Co
Pair trading matchups for JPMorgan Chase
Pair Trading with Dow Jones and JPMorgan Chase
The main advantage of trading using opposite Dow Jones and JPMorgan Chase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
| JPMorgan Chase vs. G8 EDUCATION | JPMorgan Chase vs. GREENX METALS LTD | JPMorgan Chase vs. CAREER EDUCATION | JPMorgan Chase vs. DeVry Education Group |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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