Correlation Between JPMorgan Chase and Honeywell International
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and Honeywell International 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 Honeywell International 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 Honeywell International, you can compare the effects of market volatilities on JPMorgan Chase and Honeywell International 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 Honeywell International. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and Honeywell International.
Diversification Opportunities for JPMorgan Chase and Honeywell International
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JPMorgan and Honeywell is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Honeywell International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honeywell International 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 Honeywell International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honeywell International has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Honeywell International go up and down completely randomly.
Pair Corralation between JPMorgan Chase and Honeywell International
Assuming the 90 days trading horizon JPMorgan Chase Co is expected to generate 0.61 times more return on investment than Honeywell International. However, JPMorgan Chase Co is 1.63 times less risky than Honeywell International. It trades about 0.42 of its potential returns per unit of risk. Honeywell International is currently generating about -0.02 per unit of risk. If you would invest 490,695 in JPMorgan Chase Co on October 29, 2024 and sell it today you would earn a total of 44,705 from holding JPMorgan Chase Co or generate 9.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
JPMorgan Chase Co vs. Honeywell International
Performance |
| Timeline |
| JPMorgan Chase |
| Honeywell International |
JPMorgan Chase and Honeywell International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Chase and Honeywell International
The main advantage of trading using opposite JPMorgan Chase and Honeywell International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, Honeywell International 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 Honeywell International will offset losses from the drop in Honeywell International's long position.| JPMorgan Chase vs. Ameriprise Financial | JPMorgan Chase vs. Delta Air Lines | JPMorgan Chase vs. First Republic Bank | JPMorgan Chase vs. DXC Technology |
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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 the ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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