Correlation Between JPMorgan Chase and Sony
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and Sony 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 Sony 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 Sony Group, you can compare the effects of market volatilities on JPMorgan Chase and Sony 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 Sony. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and Sony.
Diversification Opportunities for JPMorgan Chase and Sony
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JPMorgan and Sony is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Sony Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sony Group 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 Sony. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sony Group has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Sony go up and down completely randomly.
Pair Corralation between JPMorgan Chase and Sony
Assuming the 90 days trading horizon JPMorgan Chase Co is expected to under-perform the Sony. But the stock apears to be less risky and, when comparing its historical volatility, JPMorgan Chase Co is 1.44 times less risky than Sony. The stock trades about -0.01 of its potential returns per unit of risk. The Sony Group is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 39,100 in Sony Group on September 12, 2024 and sell it today you would earn a total of 5,100 from holding Sony Group or generate 13.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan Chase Co vs. Sony Group
Performance |
| Timeline |
| JPMorgan Chase |
| Sony Group |
JPMorgan Chase and Sony Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Chase and Sony
The main advantage of trading using opposite JPMorgan Chase and Sony positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, Sony 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 Sony will offset losses from the drop in Sony's long position.| JPMorgan Chase vs. Verizon Communications | JPMorgan Chase vs. Samsung Electronics Co | JPMorgan Chase vs. Applied Materials | JPMorgan Chase vs. Prudential Financial |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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