Correlation Between Sapiens International and JPMorgan Chase

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

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

Diversification Opportunities for Sapiens International and JPMorgan Chase

0.91

Correlation Coefficient

Sapiens International  JPMorgan Chase

Almost no diversification

The 3 months correlation between Sapiens and JPMorgan is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Sapiens International and JPMorgan Chase Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Chase and Sapiens International 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 Sapiens International are associated (or correlated) with JPMorgan Chase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Chase has no effect on the direction of Sapiens International i.e., Sapiens International and JPMorgan Chase go up and down completely randomly.

Pair Corralation between Sapiens International and JPMorgan Chase

Given the investment horizon of 90 days Sapiens International is expected to generate 1.22 times less return on investment than JPMorgan Chase. In addition to that, Sapiens International is 1.57 times more volatile than JPMorgan Chase Co. It trades about 0.04 of its total potential returns per unit of risk. JPMorgan Chase Co is currently generating about 0.07 per unit of volatility. If you would invest  11,354  in JPMorgan Chase Co on January 20, 2024 and sell it today you would earn a total of  7,226  from holding JPMorgan Chase Co or generate 63.64% return on investment over 90 days.

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

Sapiens International  vs.  JPMorgan Chase Co

Sapiens International

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sapiens International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Sapiens International may actually be approaching a critical reversion point that can send shares even higher in May 2024.

JPMorgan Chase

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 7 (%) 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.

Pair Trading with Sapiens International and JPMorgan Chase

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

The idea behind Sapiens International and JPMorgan Chase Co 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.