Correlation Between JPMorgan Chase and JD Sports

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

Diversification Opportunities for JPMorgan Chase and JD Sports

0.55

Correlation Coefficient

JPMorgan Chase  JD Sports

Very weak diversification

The 3 months correlation between JPMorgan and JDSPY is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion 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 JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and JD Sports go up and down completely randomly.

Pair Corralation between JPMorgan Chase and JD Sports

Considering the 90-day investment horizon JPMorgan Chase is expected to generate 2.64 times less return on investment than JD Sports. But when comparing it to its historical volatility, JPMorgan Chase Co is 4.93 times less risky than JD Sports. It trades about 0.07 of its potential returns per unit of risk. JD Sports Fashion is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  144.00  in JD Sports Fashion on January 24, 2024 and sell it today you would earn a total of  10.00  from holding JD Sports Fashion or generate 6.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

JPMorgan Chase Co  vs.  JD Sports Fashion

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 May 2024.

JD Sports Fashion

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with JPMorgan Chase and JD Sports

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

The idea behind JPMorgan Chase Co and JD Sports Fashion 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.