Correlation Between JPMorgan Chase and Twitter

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

Diversification Opportunities for JPMorgan Chase and Twitter

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between JPMorgan and Twitter is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Twitter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Twitter 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 Twitter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Twitter has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Twitter go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Twitter

If you would invest  17,973  in JPMorgan Chase Co on December 19, 2023 and sell it today you would earn a total of  1,293  from holding JPMorgan Chase Co or generate 7.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy4.76%
ValuesDaily Returns

JPMorgan Chase Co  vs.  Twitter

 Performance 
       Timeline  
JPMorgan Chase 

Risk-Adjusted Performance

21 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, JPMorgan Chase displayed solid returns over the last few months and may actually be approaching a breakup point.
Twitter 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Twitter has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Twitter is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

JPMorgan Chase and Twitter Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JPMorgan Chase and Twitter

The main advantage of trading using opposite JPMorgan Chase and Twitter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, Twitter 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 Twitter will offset losses from the drop in Twitter's long position.
The idea behind JPMorgan Chase Co and Twitter 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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