Correlation Between JPMorgan Chase and Meta Platforms

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

Diversification Opportunities for JPMorgan Chase and Meta Platforms

-0.08

Correlation Coefficient

JPMorgan Chase Meta Platforms

Good diversification

The 3 months correlation between JPMorgan and Meta Platforms is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms 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 Meta Platforms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Platforms has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Meta Platforms go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Meta Platforms

Considering the 90-day investment horizon JPMorgan Chase Co is expected to under-perform the Meta Platforms. But the stock apears to be less risky and, when comparing its historical volatility, JPMorgan Chase Co is 1.1 times less risky than Meta Platforms. The stock trades about -0.16 of its potential returns per unit of risk. The Meta Platforms is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  16,954  in Meta Platforms on December 29, 2022 and sell it today you would earn a total of  3,581  from holding Meta Platforms or generate 21.12% return on investment over 90 days.

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

JPMorgan Chase Co  vs.  Meta Platforms

JPMorgan Chase

JPMorgan Performance

0 of 100

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

Meta Platforms

Meta Platforms Performance

19 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Meta Platforms are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Meta Platforms sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JPMorgan Chase and Meta Platforms

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

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The idea behind JPMorgan Chase Co and Meta Platforms 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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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.