Correlation Between JPMorgan Chase and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and Algoma Steel 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 Algoma Steel 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 Algoma Steel Group, you can compare the effects of market volatilities on JPMorgan Chase and Algoma Steel 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 Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and Algoma Steel.
Diversification Opportunities for JPMorgan Chase and Algoma Steel
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between JPMorgan and Algoma is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Algoma Steel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algoma Steel 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 Algoma Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algoma Steel Group has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Algoma Steel go up and down completely randomly.
Pair Corralation between JPMorgan Chase and Algoma Steel
Assuming the 90 days trading horizon JPMorgan Chase Co is expected to generate 0.61 times more return on investment than Algoma Steel. However, JPMorgan Chase Co is 1.64 times less risky than Algoma Steel. It trades about 0.13 of its potential returns per unit of risk. Algoma Steel Group is currently generating about 0.06 per unit of risk. If you would invest 1,908 in JPMorgan Chase Co on August 29, 2024 and sell it today you would earn a total of 1,417 from holding JPMorgan Chase Co or generate 74.27% 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. Algoma Steel Group
Performance |
| Timeline |
| JPMorgan Chase |
| Algoma Steel Group |
JPMorgan Chase and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Chase and Algoma Steel
The main advantage of trading using opposite JPMorgan Chase and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, Algoma Steel 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 Algoma Steel will offset losses from the drop in Algoma Steel's long position.| JPMorgan Chase vs. Knight Therapeutics | JPMorgan Chase vs. DIRTT Environmental Solutions | JPMorgan Chase vs. Parkland Fuel | JPMorgan Chase vs. Pason Systems |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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