Correlation Between JPMorgan Chase and Ford

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

Diversification Opportunities for JPMorgan Chase and Ford

0.83

Correlation Coefficient

JPMorgan Chase  Ford

Very poor diversification

The 3 months correlation between JPMorgan and Ford is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Ford Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor 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 Ford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ford Motor has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Ford go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Ford

Considering the 90-day investment horizon JPMorgan Chase Co is expected to under-perform the Ford. But the stock apears to be less risky and, when comparing its historical volatility, JPMorgan Chase Co is 1.25 times less risky than Ford. The stock trades about -0.07 of its potential returns per unit of risk. The Ford Motor is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,328  in Ford Motor on January 28, 2024 and sell it today you would lose (24.00) from holding Ford Motor or give up 1.81% of portfolio value over 90 days.

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

JPMorgan Chase Co  vs.  Ford Motor

JPMorgan Chase

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, JPMorgan Chase may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Ford Motor

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Ford reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JPMorgan Chase and Ford

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

The idea behind JPMorgan Chase Co and Ford Motor 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.