Correlation Between JPMorgan Chase and Applied Materials

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

Diversification Opportunities for JPMorgan Chase and Applied Materials

0.8

Correlation Coefficient

JPMorgan Chase  Applied Materials

Very poor diversification

The 3 months correlation between JPMorgan and Applied is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials 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 Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Applied Materials go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Applied Materials

Assuming the 90 days trading horizon JPMorgan Chase Co is expected to generate 0.75 times more return on investment than Applied Materials. However, JPMorgan Chase Co is 1.34 times less risky than Applied Materials. It trades about 0.05 of its potential returns per unit of risk. Applied Materials is currently generating about 0.04 per unit of risk. If you would invest  495,253  in JPMorgan Chase Co on March 24, 2025 and sell it today you would earn a total of  28,361  from holding JPMorgan Chase Co or generate 5.73% return on investment over 90 days.

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

JPMorgan Chase Co  vs.  Applied Materials

JPMorgan Chase

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, JPMorgan Chase may actually be approaching a critical reversion point that can send shares even higher in July 2025.

Applied Materials

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Materials are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Applied Materials may actually be approaching a critical reversion point that can send shares even higher in July 2025.

Pair Trading with JPMorgan Chase and Applied Materials

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

The idea behind JPMorgan Chase Co and Applied Materials 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 Transaction History module to view history of all your transactions and understand their impact on performance.