Correlation Between JPMorgan Chase and Vertex Energy

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

Diversification Opportunities for JPMorgan Chase and Vertex Energy

-0.5

Correlation Coefficient

JPMorgan Chase  Vertex Energy

Very good diversification

The 3 months correlation between JPMorgan and Vertex is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Vertex Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vertex Energy 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 Vertex Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vertex Energy has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Vertex Energy go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Vertex Energy

Considering the 90-day investment horizon JPMorgan Chase Co is expected to under-perform the Vertex Energy. But the stock apears to be less risky and, when comparing its historical volatility, JPMorgan Chase Co is 5.39 times less risky than Vertex Energy. The stock trades about -0.01 of its potential returns per unit of risk. The Vertex Energy is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  128.00  in Vertex Energy on January 26, 2024 and sell it today you would earn a total of  15.00  from holding Vertex Energy or generate 11.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

JPMorgan Chase Co  vs.  Vertex Energy

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.

Vertex Energy

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vertex Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Vertex Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JPMorgan Chase and Vertex Energy

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

The idea behind JPMorgan Chase Co and Vertex Energy 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.