Correlation Between Southern California and JPMorgan Chase
Can any of the company-specific risk be diversified away by investing in both Southern California and JPMorgan Chase 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 Southern California and JPMorgan Chase into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern California Bancorp and JPMorgan Chase Co, you can compare the effects of market volatilities on Southern California and JPMorgan Chase 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 Southern California with a short position of JPMorgan Chase. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern California and JPMorgan Chase.
Diversification Opportunities for Southern California and JPMorgan Chase
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Southern and JPMorgan is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Southern California Bancorp and JPMorgan Chase Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Chase and Southern California 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 Southern California Bancorp are associated (or correlated) with JPMorgan Chase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Chase has no effect on the direction of Southern California i.e., Southern California and JPMorgan Chase go up and down completely randomly.
Pair Corralation between Southern California and JPMorgan Chase
Given the investment horizon of 90 days Southern California is expected to generate 2.14 times less return on investment than JPMorgan Chase. In addition to that, Southern California is 1.2 times more volatile than JPMorgan Chase Co. It trades about 0.05 of its total potential returns per unit of risk. JPMorgan Chase Co is currently generating about 0.12 per unit of volatility. If you would invest 14,492 in JPMorgan Chase Co on September 12, 2024 and sell it today you would earn a total of 9,794 from holding JPMorgan Chase Co or generate 67.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern California Bancorp vs. JPMorgan Chase Co
Performance |
| Timeline |
| Southern California |
| JPMorgan Chase |
Southern California and JPMorgan Chase Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern California and JPMorgan Chase
The main advantage of trading using opposite Southern California and JPMorgan Chase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern California position performs unexpectedly, JPMorgan Chase 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 Chase will offset losses from the drop in JPMorgan Chase's long position.| Southern California vs. JPMorgan Chase Co | Southern California vs. Citigroup | Southern California vs. Wells Fargo | Southern California vs. Toronto Dominion Bank |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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