Correlation Between Industrial Commercial and JPMorgan Chase

Can any of the company-specific risk be diversified away by investing in both Industrial Commercial and JPMorgan Chase 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 Industrial Commercial and JPMorgan Chase into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Industrial Commercial Bank and JPMorgan Chase Co, you can compare the effects of market volatilities on Industrial Commercial and JPMorgan Chase 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 Industrial Commercial with a short position of JPMorgan Chase. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Commercial and JPMorgan Chase.

Diversification Opportunities for Industrial Commercial and JPMorgan Chase

0.62

Correlation Coefficient

Industrial Commercial  JPMorgan Chase

Poor diversification

The 3 months correlation between Industrial and JPMorgan is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Commercial Bank and JPMorgan Chase Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Chase and Industrial Commercial 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 Industrial Commercial Bank are associated (or correlated) with JPMorgan Chase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Chase has no effect on the direction of Industrial Commercial i.e., Industrial Commercial and JPMorgan Chase go up and down completely randomly.

Pair Corralation between Industrial Commercial and JPMorgan Chase

Assuming the 90 days horizon Industrial Commercial Bank is expected to generate 0.6 times more return on investment than JPMorgan Chase. However, Industrial Commercial Bank is 1.66 times less risky than JPMorgan Chase. It trades about 0.16 of its potential returns per unit of risk. JPMorgan Chase Co is currently generating about -0.01 per unit of risk. If you would invest  1,015  in Industrial Commercial Bank on January 26, 2024 and sell it today you would earn a total of  36.00  from holding Industrial Commercial Bank or generate 3.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Industrial Commercial Bank  vs.  JPMorgan Chase Co

Industrial Commercial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Commercial Bank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Industrial Commercial may actually be approaching a critical reversion point that can send shares even higher in May 2024.

JPMorgan Chase

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, JPMorgan Chase displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Industrial Commercial and JPMorgan Chase

The main advantage of trading using opposite Industrial Commercial and JPMorgan Chase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Commercial position performs unexpectedly, JPMorgan Chase 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 JPMorgan Chase will offset losses from the drop in JPMorgan Chase's long position.

The idea behind Industrial Commercial Bank and JPMorgan Chase Co 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.