Correlation Between JPMorgan Chase and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and Procter Gamble 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 Procter Gamble 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 Procter Gamble, you can compare the effects of market volatilities on JPMorgan Chase and Procter Gamble 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 Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and Procter Gamble.
Diversification Opportunities for JPMorgan Chase and Procter Gamble
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between JPMorgan and Procter is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble 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 Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Procter Gamble go up and down completely randomly.
Pair Corralation between JPMorgan Chase and Procter Gamble
Considering the 90-day investment horizon JPMorgan Chase Co is expected to generate 1.33 times more return on investment than Procter Gamble. However, JPMorgan Chase is 1.33 times more volatile than Procter Gamble. It trades about 0.07 of its potential returns per unit of risk. Procter Gamble is currently generating about 0.02 per unit of risk. If you would invest 12,657 in JPMorgan Chase Co on December 29, 2023 and sell it today you would earn a total of 7,295 from holding JPMorgan Chase Co or generate 57.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
JPMorgan Chase Co vs. Procter Gamble
Performance |
Timeline |
JPMorgan Chase |
Procter Gamble |
JPMorgan Chase and Procter Gamble Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with JPMorgan Chase and Procter Gamble
The main advantage of trading using opposite JPMorgan Chase and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, Procter Gamble 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 Procter Gamble will offset losses from the drop in Procter Gamble's long position.JPMorgan Chase vs. Bank Of America | JPMorgan Chase vs. Deckers Outdoor | JPMorgan Chase vs. Intuitive Machines | JPMorgan Chase vs. Liberty Interactive LLC |
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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 the Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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