Correlation Between Exxon and JP Morgan
Can any of the company-specific risk be diversified away by investing in both Exxon 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 Exxon and JP Morgan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exxon Mobil Corp and JP Morgan Exchange Traded, you can compare the effects of market volatilities on Exxon 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 Exxon with a short position of JP Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and JP Morgan.
Diversification Opportunities for Exxon and JP Morgan
Excellent diversification
The 3 months correlation between Exxon and BBIB is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp 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 Exxon 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 Exxon Mobil Corp 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 Exxon i.e., Exxon and JP Morgan go up and down completely randomly.
Pair Corralation between Exxon and JP Morgan
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 4.06 times more return on investment than JP Morgan. However, Exxon is 4.06 times more volatile than JP Morgan Exchange Traded. It trades about 0.09 of its potential returns per unit of risk. JP Morgan Exchange Traded is currently generating about 0.02 per unit of risk. If you would invest 9,668 in Exxon Mobil Corp on August 25, 2024 and sell it today you would earn a total of 2,511 from holding Exxon Mobil Corp or generate 25.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exxon Mobil Corp vs. JP Morgan Exchange Traded
Performance |
| Timeline |
| Exxon Mobil Corp |
| JP Morgan Exchange |
Exxon and JP Morgan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and JP Morgan
The main advantage of trading using opposite Exxon and JP Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon 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.| Exxon vs. Shell PLC ADR | Exxon vs. Suncor Energy | Exxon vs. Cenovus Energy | Exxon vs. Petrleo Brasileiro SA |
| JP Morgan vs. First Advantage Corp | JP Morgan vs. ATS Corporation | JP Morgan vs. Putnam ETF Trust | JP Morgan vs. US Treasury 30 |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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