Correlation Between JPMorgan Chase and El Capitan

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

Diversification Opportunities for JPMorgan Chase and El Capitan

-0.79

Correlation Coefficient

JPMorgan Chase  El Capitan

Pay attention - limited upside

The 3 months correlation between JPMorgan and ECPN is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and El Capitan Prec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Capitan Prec 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 El Capitan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Capitan Prec has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and El Capitan go up and down completely randomly.

Pair Corralation between JPMorgan Chase and El Capitan

Considering the 90-day investment horizon JPMorgan Chase Co is expected to under-perform the El Capitan. But the stock apears to be less risky and, when comparing its historical volatility, JPMorgan Chase Co is 128.01 times less risky than El Capitan. The stock trades about -0.08 of its potential returns per unit of risk. The El Capitan Prec is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  0.01  in El Capitan Prec on February 1, 2024 and sell it today you would earn a total of  0.00  from holding El Capitan Prec or generate 0.0% return on investment over 90 days.

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

JPMorgan Chase Co  vs.  El Capitan Prec

JPMorgan Chase

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, JPMorgan Chase may actually be approaching a critical reversion point that can send shares even higher in June 2024.

El Capitan Prec

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in El Capitan Prec are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, El Capitan displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JPMorgan Chase and El Capitan

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

The idea behind JPMorgan Chase Co and El Capitan Prec 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.