Correlation Between JPMorgan Chase and Meta Platforms
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and Meta Platforms 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 Meta Platforms 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 Meta Platforms, you can compare the effects of market volatilities on JPMorgan Chase and Meta Platforms 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 Meta Platforms. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and Meta Platforms.
Diversification Opportunities for JPMorgan Chase and Meta Platforms
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JPMorgan and Meta is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms 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 Meta Platforms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Platforms has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Meta Platforms go up and down completely randomly.
Pair Corralation between JPMorgan Chase and Meta Platforms
Considering the 90-day investment horizon JPMorgan Chase is expected to generate 1.31 times less return on investment than Meta Platforms. But when comparing it to its historical volatility, JPMorgan Chase Co is 1.94 times less risky than Meta Platforms. It trades about 0.64 of its potential returns per unit of risk. Meta Platforms is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 58,551 in Meta Platforms on November 1, 2024 and sell it today you would earn a total of 9,098 from holding Meta Platforms or generate 15.54% 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. Meta Platforms
Performance |
| Timeline |
| JPMorgan Chase |
| Meta Platforms |
JPMorgan Chase and Meta Platforms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Chase and Meta Platforms
The main advantage of trading using opposite JPMorgan Chase and Meta Platforms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, Meta Platforms 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 Meta Platforms will offset losses from the drop in Meta Platforms' long position.| JPMorgan Chase vs. Toronto Dominion Bank | JPMorgan Chase vs. Royal Bank of | JPMorgan Chase vs. Nu Holdings | JPMorgan Chase vs. HSBC Holdings PLC |
| Meta Platforms vs. Alphabet Inc Class A | Meta Platforms vs. Twilio Inc | Meta Platforms vs. Snap Inc | Meta Platforms vs. Baidu Inc |
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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