Problem Statement

JP Morgan Chase & Co. is one of the oldest, largest and best-known financial institutions in the United States. As one of the most famous Investment Banks, I am especially interested in their financial performance. How much profits did they earn each year? Whether it is valuable for investors?
Analysing the Risk and Return could help predict the Expected Value of stocks and make smart investment plans in advance!!

Datasets

The data used in this project was from Official Website of JP Morgan Chase & Co., Yahoo Finance and Fama-French Data Library. The variables are from Financial Statement, Cash Flow Statement and Income Statement of JP Morgan Chase & Co. from 2003 to 2016. The other variables are factors used in Financial Modeling (CAPM and Fama-French Three Factors Models). There are 17 variables, and 1 character variables 16 numeric variables in total.

Variables used in Financial Modeling:

Proposed Methodology

I’m going to use 10-year historical stock price of JP Morgan and summary statistics to analyse the risk and returns from 2011 to 2016. In addition, I will also utilize regression method to capture any possible risk factors which influence the return of JPMorgan stock price. To better illustrate the findings, I will leverage R packages like ggplot to present patterns and noteworthy trends.

Why This Matters?

By understanding the Expected Value of Stock Price, we could make a decision whether the current stock price is undervalued or overvalued.

If the Price is undervalued, financial analyst will recommend a Buy Option. Since the stock price would highly likely to increase in the near future. And if investors sell stocks at the peaking price, they could earn profits immediately.

Besides, using different financial modeling could evaluate clearly the risk factors that influence returns of stock, such as market risk, government policy and individual risk attitudes.Thus, Financial Analytics is critical importance for decision makers to invest in target company.