Correlation Between JPMorgan Chase and Imperial Brands
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and Imperial Brands 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 Imperial Brands 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 Imperial Brands PLC, you can compare the effects of market volatilities on JPMorgan Chase and Imperial Brands 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 Imperial Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and Imperial Brands.
Diversification Opportunities for JPMorgan Chase and Imperial Brands
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JPMorgan and Imperial is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Imperial Brands PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Brands PLC 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 Imperial Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Brands PLC has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Imperial Brands go up and down completely randomly.
Pair Corralation between JPMorgan Chase and Imperial Brands
Considering the 90-day investment horizon JPMorgan Chase is expected to generate 1.25 times less return on investment than Imperial Brands. In addition to that, JPMorgan Chase is 1.44 times more volatile than Imperial Brands PLC. It trades about 0.11 of its total potential returns per unit of risk. Imperial Brands PLC is currently generating about 0.2 per unit of volatility. If you would invest 2,124 in Imperial Brands PLC on August 27, 2024 and sell it today you would earn a total of 1,052 from holding Imperial Brands PLC or generate 49.53% 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. Imperial Brands PLC
Performance |
| Timeline |
| JPMorgan Chase |
| Imperial Brands PLC |
JPMorgan Chase and Imperial Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Chase and Imperial Brands
The main advantage of trading using opposite JPMorgan Chase and Imperial Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, Imperial Brands 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 Imperial Brands will offset losses from the drop in Imperial Brands' long position.| JPMorgan Chase vs. Toronto Dominion Bank | JPMorgan Chase vs. Nu Holdings | JPMorgan Chase vs. HSBC Holdings PLC | JPMorgan Chase vs. Bank of Montreal |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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