Correlation Between JPMorgan Chase and Nike

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

Diversification Opportunities for JPMorgan Chase and Nike

-0.69

Correlation Coefficient

JPMorgan Chase  Nike

Excellent diversification

The 3 months correlation between JPMorgan and Nike is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Nike go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Nike

Considering the 90-day investment horizon JPMorgan Chase Co is expected to under-perform the Nike. In addition to that, JPMorgan Chase is 1.32 times more volatile than Nike Inc. It trades about -0.01 of its total potential returns per unit of risk. Nike Inc is currently generating about 0.08 per unit of volatility. If you would invest  9,258  in Nike Inc on January 26, 2024 and sell it today you would earn a total of  206.00  from holding Nike Inc or generate 2.23% 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.  Nike Inc

JPMorgan Chase

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, JPMorgan Chase displayed solid returns over the last few months and may actually be approaching a breakup point.

Nike Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nike Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's forward-looking signals remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with JPMorgan Chase and Nike

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

The idea behind JPMorgan Chase Co and Nike Inc 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.