Correlation Between Exxon and JP Morgan

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Can any of the company-specific risk be diversified away by investing in both Exxon and JP Morgan 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 Exxon and JP Morgan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exxon Mobil Corp and JP Morgan Chase, you can compare the effects of market volatilities on Exxon and JP Morgan 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 Exxon with a short position of JP Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and JP Morgan.

Diversification Opportunities for Exxon and JP Morgan

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Exxon and JP Morgan is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and JP Morgan Chase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JP Morgan Chase and Exxon 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 Exxon Mobil Corp are associated (or correlated) with JP Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JP Morgan Chase has no effect on the direction of Exxon i.e., Exxon and JP Morgan go up and down completely randomly.

Pair Corralation between Exxon and JP Morgan

Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 1.27 times more return on investment than JP Morgan. However, Exxon is 1.27 times more volatile than JP Morgan Chase. It trades about 0.11 of its potential returns per unit of risk. JP Morgan Chase is currently generating about 0.02 per unit of risk. If you would invest  3,107  in Exxon Mobil Corp on July 6, 2022 and sell it today you would earn a total of  6,085  from holding Exxon Mobil Corp or generate 195.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Exxon Mobil Corp  vs.  JP Morgan Chase

 Performance (%) 
       Timeline  
Exxon Mobil Corp 
Exxon Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Exxon may actually be approaching a critical reversion point that can send shares even higher in November 2022.

Exxon Price Channel

JP Morgan Chase 
JP Morgan Performance
0 of 100
Over the last 90 days JP Morgan Chase has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, JP Morgan is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

JP Morgan Price Channel

Exxon and JP Morgan Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Exxon and JP Morgan

The main advantage of trading using opposite Exxon and JP Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, JP Morgan 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 JP Morgan will offset losses from the drop in JP Morgan's long position.
Exxon vs. Chevron Corp
The idea behind Exxon Mobil Corp and JP Morgan Chase 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.
JP Morgan vs. Amazon Inc
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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