Correlation Between Bank of America and JPMorgan Healthcare
Can any of the company-specific risk be diversified away by investing in both Bank of America and JPMorgan Healthcare 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 JPMorgan Healthcare 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 JPMorgan Healthcare Leaders, you can compare the effects of market volatilities on Bank of America and JPMorgan Healthcare 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 JPMorgan Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and JPMorgan Healthcare.
Diversification Opportunities for Bank of America and JPMorgan Healthcare
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and JPMorgan is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and JPMorgan Healthcare Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Healthcare 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 JPMorgan Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Healthcare has no effect on the direction of Bank of America i.e., Bank of America and JPMorgan Healthcare go up and down completely randomly.
Pair Corralation between Bank of America and JPMorgan Healthcare
Considering the 90-day investment horizon Bank of America is expected to under-perform the JPMorgan Healthcare. In addition to that, Bank of America is 1.5 times more volatile than JPMorgan Healthcare Leaders. It trades about -0.31 of its total potential returns per unit of risk. JPMorgan Healthcare Leaders is currently generating about -0.05 per unit of volatility. If you would invest 5,457 in JPMorgan Healthcare Leaders on November 27, 2024 and sell it today you would lose (40.00) from holding JPMorgan Healthcare Leaders or give up 0.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Bank of America vs. JPMorgan Healthcare Leaders
Performance |
| Timeline |
| Bank of America |
| JPMorgan Healthcare |
Bank of America and JPMorgan Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and JPMorgan Healthcare
The main advantage of trading using opposite Bank of America and JPMorgan Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, JPMorgan Healthcare 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 Healthcare will offset losses from the drop in JPMorgan Healthcare's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
| JPMorgan Healthcare vs. First Trust Exchange Traded | JPMorgan Healthcare vs. Horizon Kinetics Medical | JPMorgan Healthcare vs. Harbor Health Care | JPMorgan Healthcare vs. Fidelity MSCI Health |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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