Correlation Between JP Morgan and Twitter

By analyzing existing cross correlation between JP Morgan Chase and Twitter, you can compare the effects of market volatilities on JP Morgan 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 JP Morgan with a short position of Twitter. Check out your portfolio center. Please also check ongoing floating volatility patterns of JP Morgan and Twitter.

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Can any of the company-specific risk be diversified away by investing in both JP Morgan 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 JP Morgan and Twitter into the same portfolio, which is an essential part of the fundamental portfolio management process.

Diversification Opportunities for JP Morgan and Twitter

-0.48
  Correlation Coefficient
JP Morgan Chase
Twitter

Very good diversification

The 3 months correlation between JP Morgan and Twitter is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding JP Morgan Chase and Twitter in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Twitter and JP Morgan 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 JP Morgan Chase 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 JP Morgan i.e., JP Morgan and Twitter go up and down completely randomly.

Pair Corralation between JP Morgan and Twitter

Considering the 90-day investment horizon JP Morgan Chase is expected to generate 0.55 times more return on investment than Twitter. However, JP Morgan Chase is 1.83 times less risky than Twitter. It trades about 0.09 of its potential returns per unit of risk. Twitter is currently generating about -0.01 per unit of risk. If you would invest  16,305  in JP Morgan Chase on July 28, 2021 and sell it today you would earn a total of  789.00  from holding JP Morgan Chase or generate 4.84% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

JP Morgan Chase  vs.  Twitter

 Performance (%) 
      Timeline 
JP Morgan Chase 
 JP Morgan Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in JP Morgan Chase are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively sluggish basic indicators, JP Morgan may actually be approaching a critical reversion point that can send shares even higher in November 2021.

JP Morgan Price Channel

Twitter 
 Twitter Performance
0 of 100
Over the last 90 days Twitter has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Twitter Price Channel

JP Morgan and Twitter Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with JP Morgan and Twitter

The main advantage of trading using opposite JP Morgan and Twitter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JP Morgan 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 JP Morgan Chase 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.
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 Probability Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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