Correlation Between JPMorgan Chase and Prairie Provident
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and Prairie Provident 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 Prairie Provident 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 Prairie Provident Resources, you can compare the effects of market volatilities on JPMorgan Chase and Prairie Provident 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 Prairie Provident. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and Prairie Provident.
Diversification Opportunities for JPMorgan Chase and Prairie Provident
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between JPMorgan and Prairie is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Prairie Provident Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prairie Provident 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 Prairie Provident. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prairie Provident has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Prairie Provident go up and down completely randomly.
Pair Corralation between JPMorgan Chase and Prairie Provident
Assuming the 90 days trading horizon JPMorgan Chase Co is expected to generate 0.17 times more return on investment than Prairie Provident. However, JPMorgan Chase Co is 5.92 times less risky than Prairie Provident. It trades about 0.09 of its potential returns per unit of risk. Prairie Provident Resources is currently generating about 0.02 per unit of risk. If you would invest 1,778 in JPMorgan Chase Co on October 9, 2024 and sell it today you would earn a total of 1,417 from holding JPMorgan Chase Co or generate 79.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan Chase Co vs. Prairie Provident Resources
Performance |
| Timeline |
| JPMorgan Chase |
| Prairie Provident |
JPMorgan Chase and Prairie Provident Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Chase and Prairie Provident
The main advantage of trading using opposite JPMorgan Chase and Prairie Provident positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, Prairie Provident 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 Prairie Provident will offset losses from the drop in Prairie Provident's long position.| JPMorgan Chase vs. Maple Leaf Foods | JPMorgan Chase vs. NextSource Materials | JPMorgan Chase vs. Labrador Iron Ore | JPMorgan Chase vs. Leading Edge Materials |
| Prairie Provident vs. Pine Cliff Energy | Prairie Provident vs. InPlay Oil Corp | Prairie Provident vs. Journey Energy |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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