Correlation Between NYSE Composite and JP Morgan
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and JP Morgan 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 NYSE Composite and JP Morgan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and JP Morgan Exchange Traded, you can compare the effects of market volatilities on NYSE Composite and JP Morgan 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 NYSE Composite with a short position of JP Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and JP Morgan.
Diversification Opportunities for NYSE Composite and JP Morgan
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and JCTR is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and JP Morgan Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JP Morgan Exchange and NYSE Composite 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 NYSE Composite are associated (or correlated) with JP Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JP Morgan Exchange has no effect on the direction of NYSE Composite i.e., NYSE Composite and JP Morgan go up and down completely randomly.
Pair Corralation between NYSE Composite and JP Morgan
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.28 times less return on investment than JP Morgan. But when comparing it to its historical volatility, NYSE Composite is 1.27 times less risky than JP Morgan. It trades about 0.14 of its potential returns per unit of risk. JP Morgan Exchange Traded is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 7,045 in JP Morgan Exchange Traded on September 1, 2024 and sell it today you would earn a total of 1,154 from holding JP Morgan Exchange Traded or generate 16.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
NYSE Composite vs. JP Morgan Exchange Traded
Performance |
| Timeline |
NYSE Composite and JP Morgan Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
JP Morgan Exchange Traded
Pair trading matchups for JP Morgan
Pair Trading with NYSE Composite and JP Morgan
The main advantage of trading using opposite NYSE Composite and JP Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, JP Morgan 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 JP Morgan will offset losses from the drop in JP Morgan's long position.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
| JP Morgan vs. Vanguard Total Stock | JP Morgan vs. SPDR SP 500 | JP Morgan vs. iShares Core SP | JP Morgan vs. Vanguard Dividend Appreciation |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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