Correlation Between Amazon and JP Morgan

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Can any of the company-specific risk be diversified away by investing in both Amazon 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 Amazon and JP Morgan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and JP Morgan Chase, you can compare the effects of market volatilities on Amazon 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 Amazon with a short position of JP Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and JP Morgan.

Diversification Opportunities for Amazon and JP Morgan

0.17
  Correlation Coefficient

Average diversification

The 3 months correlation between Amazon and JP Morgan is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and JP Morgan Chase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JP Morgan Chase and Amazon 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 Amazon Inc 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 Chase has no effect on the direction of Amazon i.e., Amazon and JP Morgan go up and down completely randomly.

Pair Corralation between Amazon and JP Morgan

Given the investment horizon of 90 days Amazon Inc is expected to generate 1.52 times more return on investment than JP Morgan. However, Amazon is 1.52 times more volatile than JP Morgan Chase. It trades about 0.0 of its potential returns per unit of risk. JP Morgan Chase is currently generating about -0.02 per unit of risk. If you would invest  15,798  in Amazon Inc on May 20, 2022 and sell it today you would lose (1,588)  from holding Amazon Inc or give up 10.05% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Amazon Inc  vs.  JP Morgan Chase

 Performance (%) 
       Timeline  
Amazon Inc 
Amazon Performance
12 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Amazon disclosed solid returns over the last few months and may actually be approaching a breakup point.

Amazon Price Channel

JP Morgan Chase 
JP Morgan Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in JP Morgan Chase are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, JP Morgan may actually be approaching a critical reversion point that can send shares even higher in September 2022.

JP Morgan Price Channel

Amazon and JP Morgan Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and JP Morgan

The main advantage of trading using opposite Amazon and JP Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon 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.
The idea behind Amazon Inc and JP Morgan Chase 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.
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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