Correlation Between JPMorgan Chase and High Liner
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and High Liner 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 High Liner 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 High Liner Foods, you can compare the effects of market volatilities on JPMorgan Chase and High Liner 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 High Liner. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and High Liner.
Diversification Opportunities for JPMorgan Chase and High Liner
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between JPMorgan and High is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and High Liner Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Liner Foods 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 High Liner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Liner Foods has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and High Liner go up and down completely randomly.
Pair Corralation between JPMorgan Chase and High Liner
Assuming the 90 days trading horizon JPMorgan Chase Co is expected to generate 0.83 times more return on investment than High Liner. However, JPMorgan Chase Co is 1.2 times less risky than High Liner. It trades about 0.1 of its potential returns per unit of risk. High Liner Foods is currently generating about 0.03 per unit of risk. If you would invest 1,744 in JPMorgan Chase Co on September 2, 2024 and sell it today you would earn a total of 1,600 from holding JPMorgan Chase Co or generate 91.74% 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. High Liner Foods
Performance |
| Timeline |
| JPMorgan Chase |
| High Liner Foods |
JPMorgan Chase and High Liner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Chase and High Liner
The main advantage of trading using opposite JPMorgan Chase and High Liner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, High Liner 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 High Liner will offset losses from the drop in High Liner's long position.| JPMorgan Chase vs. Toronto Dominion Bank | JPMorgan Chase vs. Royal Bank of | JPMorgan Chase vs. Bank of Montreal | JPMorgan Chase vs. Canadian Imperial Bank |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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