Correlation Between Exxon and JPMorgan Chase
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
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Exxon and JPMorgan is 0.81. 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 Mobil Corp is expected to generate 0.46 times more return on investment than JPMorgan Chase. However, Exxon Mobil Corp is 2.17 times less risky than JPMorgan Chase. It trades about 0.31 of its potential returns per unit of risk. JPMorgan Chase Co is currently generating about 0.0 per unit of risk. If you would invest 11,465 in Exxon Mobil Corp on January 25, 2024 and sell it today you would earn a total of 640.00 from holding Exxon Mobil Corp or generate 5.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exxon Mobil Corp vs. JPMorgan Chase Co
Performance |
| Timeline |
| Exxon Mobil Corp |
| JPMorgan Chase |
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.| Exxon vs. Shell PLC ADR | Exxon vs. BP PLC ADR | Exxon vs. Suncor Energy | Exxon vs. Petroleo Brasileiro Petrobras |
| JPMorgan Chase vs. Citigroup | JPMorgan Chase vs. Wells Fargo | JPMorgan Chase vs. Toronto Dominion Bank | JPMorgan Chase vs. Nu Holdings |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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