Correlation Between JPMorgan Chase and Exxon
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and Exxon 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 Exxon 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 Exxon Mobil Corp, you can compare the effects of market volatilities on JPMorgan Chase and Exxon 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 Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and Exxon.
Diversification Opportunities for JPMorgan Chase and Exxon
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between JPMorgan and Exxon is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Exxon Mobil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil Corp 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 Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil Corp has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Exxon go up and down completely randomly.
Pair Corralation between JPMorgan Chase and Exxon
Considering the 90-day investment horizon JPMorgan Chase Co is expected to generate 0.83 times more return on investment than Exxon. However, JPMorgan Chase Co is 1.2 times less risky than Exxon. It trades about 0.08 of its potential returns per unit of risk. Exxon Mobil Corp is currently generating about 0.05 per unit of risk. If you would invest 11,681 in JPMorgan Chase Co on January 25, 2024 and sell it today you would earn a total of 7,575 from holding JPMorgan Chase Co or generate 64.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan Chase Co vs. Exxon Mobil Corp
Performance |
| Timeline |
| JPMorgan Chase |
| Exxon Mobil Corp |
JPMorgan Chase and Exxon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Chase and Exxon
The main advantage of trading using opposite JPMorgan Chase and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, Exxon 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 Exxon will offset losses from the drop in Exxon's long position.| JPMorgan Chase vs. Citigroup | JPMorgan Chase vs. Wells Fargo | JPMorgan Chase vs. Toronto Dominion Bank | JPMorgan Chase vs. Nu Holdings |
| Exxon vs. Shell PLC ADR | Exxon vs. BP PLC ADR | Exxon vs. Suncor Energy | Exxon vs. Petroleo Brasileiro Petrobras |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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