Correlation Between JPMorgan Chase and Amazon
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and Amazon 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 Amazon 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 Amazon Inc, you can compare the effects of market volatilities on JPMorgan Chase and Amazon 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 Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and Amazon.
Diversification Opportunities for JPMorgan Chase and Amazon
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between JPMorgan and Amazon is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Amazon go up and down completely randomly.
Pair Corralation between JPMorgan Chase and Amazon
Assuming the 90 days trading horizon JPMorgan Chase Co is expected to generate 0.96 times more return on investment than Amazon. However, JPMorgan Chase Co is 1.04 times less risky than Amazon. It trades about 0.18 of its potential returns per unit of risk. Amazon Inc is currently generating about 0.13 per unit of risk. If you would invest 329,761 in JPMorgan Chase Co on August 24, 2024 and sell it today you would earn a total of 171,239 from holding JPMorgan Chase Co or generate 51.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan Chase Co vs. Amazon Inc
Performance |
| Timeline |
| JPMorgan Chase |
| Amazon Inc |
JPMorgan Chase and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Chase and Amazon
The main advantage of trading using opposite JPMorgan Chase and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.| JPMorgan Chase vs. FibraHotel | JPMorgan Chase vs. Micron Technology | JPMorgan Chase vs. Cognizant Technology Solutions | JPMorgan Chase vs. Deutsche Bank Aktiengesellschaft |
| Amazon vs. The Select Sector | Amazon vs. Promotora y Operadora | Amazon vs. iShares Global Timber | Amazon vs. SPDR Series Trust |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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