Correlation Between JPMorgan Chase and Equinor ASA
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and Equinor ASA 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 Equinor ASA 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 Equinor ASA ADR, you can compare the effects of market volatilities on JPMorgan Chase and Equinor ASA 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 Equinor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and Equinor ASA.
Diversification Opportunities for JPMorgan Chase and Equinor ASA
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between JPMorgan and Equinor is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Equinor ASA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinor ASA ADR 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 Equinor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinor ASA ADR has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Equinor ASA go up and down completely randomly.
Pair Corralation between JPMorgan Chase and Equinor ASA
Considering the 90-day investment horizon JPMorgan Chase Co is expected to generate 0.93 times more return on investment than Equinor ASA. However, JPMorgan Chase Co is 1.07 times less risky than Equinor ASA. It trades about 0.11 of its potential returns per unit of risk. Equinor ASA ADR is currently generating about 0.03 per unit of risk. If you would invest 17,926 in JPMorgan Chase Co on October 22, 2024 and sell it today you would earn a total of 7,990 from holding JPMorgan Chase Co or generate 44.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan Chase Co vs. Equinor ASA ADR
Performance |
| Timeline |
| JPMorgan Chase |
| Equinor ASA ADR |
JPMorgan Chase and Equinor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Chase and Equinor ASA
The main advantage of trading using opposite JPMorgan Chase and Equinor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, Equinor ASA 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 Equinor ASA will offset losses from the drop in Equinor ASA's long position.| JPMorgan Chase vs. Citigroup | JPMorgan Chase vs. Wells Fargo | JPMorgan Chase vs. Toronto Dominion Bank | JPMorgan Chase vs. Nu Holdings |
| Equinor ASA vs. Shell PLC ADR | Equinor ASA vs. BP PLC ADR | Equinor ASA vs. Eni SpA ADR | Equinor ASA vs. Galp Energa |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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