Correlation Between Exxon and JPMorgan Chase

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

Diversification Opportunities for Exxon and JPMorgan Chase

-0.14
  Correlation Coefficient

Good diversification

The 3 months correlation between Exxon and JPMorgan is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and JPMorgan Chase Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan 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 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 Exxon i.e., Exxon and JPMorgan Chase go up and down completely randomly.

Pair Corralation between Exxon and JPMorgan Chase

Considering the 90-day investment horizon Exxon is expected to generate 5.43 times less return on investment than JPMorgan Chase. But when comparing it to its historical volatility, Exxon Mobil Corp is 1.32 times less risky than JPMorgan Chase. It trades about 0.06 of its potential returns per unit of risk. JPMorgan Chase Co is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  19,778  in JPMorgan Chase Co on April 23, 2024 and sell it today you would earn a total of  1,250  from holding JPMorgan Chase Co or generate 6.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Exxon Mobil Corp  vs.  JPMorgan Chase Co

 Performance 
       Timeline  
Exxon Mobil Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Exxon Mobil Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Exxon is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
JPMorgan Chase 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 9 (%) 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 August 2024.

Exxon and JPMorgan Chase Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Exxon and JPMorgan Chase

The main advantage of trading using opposite Exxon and JPMorgan Chase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon 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 Exxon Mobil Corp 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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