Correlation Between JPMorgan Chase and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and Westpac Banking 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 Westpac Banking 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 Westpac Banking, you can compare the effects of market volatilities on JPMorgan Chase and Westpac Banking 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 Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and Westpac Banking.
Diversification Opportunities for JPMorgan Chase and Westpac Banking
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JPMorgan and Westpac is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking 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 Westpac Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westpac Banking has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Westpac Banking go up and down completely randomly.
Pair Corralation between JPMorgan Chase and Westpac Banking
Assuming the 90 days horizon JPMorgan Chase Co is expected to generate 2.78 times more return on investment than Westpac Banking. However, JPMorgan Chase is 2.78 times more volatile than Westpac Banking. It trades about 0.2 of its potential returns per unit of risk. Westpac Banking is currently generating about 0.37 per unit of risk. If you would invest 20,690 in JPMorgan Chase Co on August 31, 2024 and sell it today you would earn a total of 2,985 from holding JPMorgan Chase Co or generate 14.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan Chase Co vs. Westpac Banking
Performance |
| Timeline |
| JPMorgan Chase |
| Westpac Banking |
JPMorgan Chase and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Chase and Westpac Banking
The main advantage of trading using opposite JPMorgan Chase and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, Westpac Banking 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 Westpac Banking will offset losses from the drop in Westpac Banking's long position.| JPMorgan Chase vs. TreeHouse Foods | JPMorgan Chase vs. Virtus Investment Partners | JPMorgan Chase vs. CAL MAINE FOODS | JPMorgan Chase vs. Genco Shipping Trading |
| Westpac Banking vs. WESTLAKE CHEMICAL | Westpac Banking vs. Zijin Mining Group | Westpac Banking vs. Silicon Motion Technology | Westpac Banking vs. Eastman Chemical |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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