Correlation Between JPMorgan Chase and DL Industries

Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and DL Industries 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 DL Industries 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 DL Industries ADR, you can compare the effects of market volatilities on JPMorgan Chase and DL Industries 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 DL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and DL Industries.

Diversification Opportunities for JPMorgan Chase and DL Industries

-0.54

Correlation Coefficient

JPMorgan Chase  DL Industries

Excellent diversification

The 3 months correlation between JPMorgan and DLNDY is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and DL Industries ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DL Industries ADR 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 DL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DL Industries ADR has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and DL Industries go up and down completely randomly.

Pair Corralation between JPMorgan Chase and DL Industries

Considering the 90-day investment horizon JPMorgan Chase Co is expected to generate 0.47 times more return on investment than DL Industries. However, JPMorgan Chase Co is 2.12 times less risky than DL Industries. It trades about 0.17 of its potential returns per unit of risk. DL Industries ADR is currently generating about 0.01 per unit of risk. If you would invest  17,477  in JPMorgan Chase Co on February 12, 2024 and sell it today you would earn a total of  2,400  from holding JPMorgan Chase Co or generate 13.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

JPMorgan Chase Co  vs.  DL Industries ADR

JPMorgan Chase

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, JPMorgan Chase displayed solid returns over the last few months and may actually be approaching a breakup point.

DL Industries ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DL Industries ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, DL Industries is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JPMorgan Chase and DL Industries

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

The idea behind JPMorgan Chase Co and DL Industries ADR 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 the Stocks Directory module to find actively traded stocks across global markets.