Correlation Between JPMorgan Chase and Sapiens International

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

Diversification Opportunities for JPMorgan Chase and Sapiens International

0.9

Correlation Coefficient

JPMorgan Chase  Sapiens International

Almost no diversification

The 3 months correlation between JPMorgan and Sapiens is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Sapiens International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapiens International 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 Sapiens International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapiens International has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Sapiens International go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Sapiens International

Considering the 90-day investment horizon JPMorgan Chase Co is expected to generate 0.95 times more return on investment than Sapiens International. However, JPMorgan Chase Co is 1.05 times less risky than Sapiens International. It trades about -0.05 of its potential returns per unit of risk. Sapiens International is currently generating about -0.06 per unit of risk. If you would invest  19,369  in JPMorgan Chase Co on January 24, 2024 and sell it today you would lose (428.00) from holding JPMorgan Chase Co or give up 2.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.24%
Values	Daily Returns

JPMorgan Chase Co  vs.  Sapiens International

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.

Sapiens International

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sapiens International are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Sapiens International may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with JPMorgan Chase and Sapiens International

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

The idea behind JPMorgan Chase Co and Sapiens International 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.