Correlation Between Bank of America and JP Morgan
Can any of the company-specific risk be diversified away by investing in both Bank of America and JP Morgan 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 Bank of America and JP Morgan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and JP Morgan Exchange Traded, you can compare the effects of market volatilities on Bank of America and JP Morgan 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 Bank of America with a short position of JP Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and JP Morgan.
Diversification Opportunities for Bank of America and JP Morgan
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and BBSB is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and JP Morgan Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JP Morgan Exchange and Bank of America 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 Bank of America are associated (or correlated) with JP Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JP Morgan Exchange has no effect on the direction of Bank of America i.e., Bank of America and JP Morgan go up and down completely randomly.
Pair Corralation between Bank of America and JP Morgan
Considering the 90-day investment horizon Bank of America is expected to generate 17.51 times more return on investment than JP Morgan. However, Bank of America is 17.51 times more volatile than JP Morgan Exchange Traded. It trades about 0.24 of its potential returns per unit of risk. JP Morgan Exchange Traded is currently generating about -0.2 per unit of risk. If you would invest 3,945 in Bank of America on August 25, 2024 and sell it today you would earn a total of 755.00 from holding Bank of America or generate 19.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. JP Morgan Exchange Traded
Performance |
| Timeline |
| Bank of America |
| JP Morgan Exchange |
Bank of America and JP Morgan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and JP Morgan
The main advantage of trading using opposite Bank of America and JP Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, JP Morgan 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 JP Morgan will offset losses from the drop in JP Morgan's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| JP Morgan vs. SPDR Barclays Short | JP Morgan vs. iShares Agency Bond | JP Morgan vs. Rbb Fund | JP Morgan vs. Bondbloxx ETF Trust |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |