Correlation Between JP Morgan and ConocoPhillips

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

Diversification Opportunities for JP Morgan and ConocoPhillips

  Correlation Coefficient

Very poor diversification

The 3 months correlation between JP Morgan and ConocoPhillips is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding JP Morgan Chase and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips and JP Morgan 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 JP Morgan Chase are associated (or correlated) with ConocoPhillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConocoPhillips has no effect on the direction of JP Morgan i.e., JP Morgan and ConocoPhillips go up and down completely randomly.

Pair Corralation between JP Morgan and ConocoPhillips

Considering the 90-day investment horizon JP Morgan is expected to generate 2.51 times less return on investment than ConocoPhillips. But when comparing it to its historical volatility, JP Morgan Chase is 1.78 times less risky than ConocoPhillips. It trades about 0.22 of its potential returns per unit of risk. ConocoPhillips is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  9,030  in ConocoPhillips on May 21, 2022 and sell it today you would earn a total of  1,458  from holding ConocoPhillips or generate 16.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
ValuesDaily Returns

JP Morgan Chase  vs.  ConocoPhillips

 Performance (%) 
JP Morgan Chase 
JP Morgan Performance
0 of 100
Over the last 90 days JP Morgan Chase has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, JP Morgan is not utilizing all of its potentials. The recent stock price chaos, may contribute to medium-term losses for the stakeholders.

JP Morgan Price Channel

ConocoPhillips Performance
0 of 100
Over the last 90 days ConocoPhillips has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, ConocoPhillips is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the insiders.

ConocoPhillips Price Channel

JP Morgan and ConocoPhillips Volatility Contrast

   Predicted Return Density   

Pair Trading with JP Morgan and ConocoPhillips

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


Pair trading matchups for ConocoPhillips

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 Fund Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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