Correlation Between JPMorgan Chase and Exxon

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

Diversification Opportunities for JPMorgan Chase and Exxon

0.02
  Correlation Coefficient

Significant diversification

The 3 months correlation between JPMorgan and Exxon is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Exxon Mobil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil Corp 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 Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil Corp has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Exxon go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Exxon

Considering the 90-day investment horizon JPMorgan Chase Co is expected to generate 0.59 times more return on investment than Exxon. However, JPMorgan Chase Co is 1.71 times less risky than Exxon. It trades about 0.28 of its potential returns per unit of risk. Exxon Mobil Corp is currently generating about -0.06 per unit of risk. If you would invest  14,493  in JPMorgan Chase Co on November 25, 2023 and sell it today you would earn a total of  3,814  from holding JPMorgan Chase Co or generate 26.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

JPMorgan Chase Co  vs.  Exxon Mobil Corp

 Performance 
       Timeline  
JPMorgan Chase 

Risk-Adjusted Performance

32 of 100

 
Low
 
High
Very Strong
Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, JPMorgan Chase displayed solid returns over the last few months and may actually be approaching a breakup point.
Exxon Mobil Corp 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Exxon is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

JPMorgan Chase and Exxon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JPMorgan Chase and Exxon

The main advantage of trading using opposite JPMorgan Chase and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, Exxon 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 Exxon will offset losses from the drop in Exxon's long position.
The idea behind JPMorgan Chase Co and Exxon Mobil Corp 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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