Correlation Between JPMorgan Chase and KRAFT

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Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and KRAFT 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 KRAFT 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 KRAFT HEINZ FOODS, you can compare the effects of market volatilities on JPMorgan Chase and KRAFT 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 KRAFT. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and KRAFT.

Diversification Opportunities for JPMorgan Chase and KRAFT

0.09
  Correlation Coefficient

Significant diversification

The 3 months correlation between JPMorgan and KRAFT is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and KRAFT HEINZ FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KRAFT HEINZ 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 KRAFT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KRAFT HEINZ FOODS has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and KRAFT go up and down completely randomly.

Pair Corralation between JPMorgan Chase and KRAFT

Considering the 90-day investment horizon JPMorgan Chase Co is expected to generate 1.68 times more return on investment than KRAFT. However, JPMorgan Chase is 1.68 times more volatile than KRAFT HEINZ FOODS. It trades about -0.1 of its potential returns per unit of risk. KRAFT HEINZ FOODS is currently generating about -0.2 per unit of risk. If you would invest  26,714  in JPMorgan Chase Co on November 29, 2024 and sell it today you would lose (835.00) from holding JPMorgan Chase Co or give up 3.13% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

JPMorgan Chase Co  vs.  KRAFT HEINZ FOODS

 Performance 
       Timeline  
JPMorgan Chase 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, JPMorgan Chase is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
KRAFT HEINZ FOODS 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days KRAFT HEINZ FOODS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KRAFT is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

JPMorgan Chase and KRAFT Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JPMorgan Chase and KRAFT

The main advantage of trading using opposite JPMorgan Chase and KRAFT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, KRAFT 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 KRAFT will offset losses from the drop in KRAFT's long position.
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The idea behind JPMorgan Chase Co and KRAFT HEINZ FOODS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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