Correlation Between ECB Bancorp and JPMorgan Chase
Can any of the company-specific risk be diversified away by investing in both ECB Bancorp 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 ECB Bancorp and JPMorgan Chase into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECB Bancorp and JPMorgan Chase Co, you can compare the effects of market volatilities on ECB Bancorp 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 ECB Bancorp with a short position of JPMorgan Chase. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECB Bancorp and JPMorgan Chase.
Diversification Opportunities for ECB Bancorp and JPMorgan Chase
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ECB and JPMorgan is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding ECB 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 ECB Bancorp 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 ECB 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 ECB Bancorp i.e., ECB Bancorp and JPMorgan Chase go up and down completely randomly.
Pair Corralation between ECB Bancorp and JPMorgan Chase
Given the investment horizon of 90 days ECB Bancorp is expected to generate 5.84 times less return on investment than JPMorgan Chase. But when comparing it to its historical volatility, ECB Bancorp is 2.77 times less risky than JPMorgan Chase. It trades about 0.1 of its potential returns per unit of risk. JPMorgan Chase Co is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 21,978 in JPMorgan Chase Co on September 4, 2024 and sell it today you would earn a total of 2,647 from holding JPMorgan Chase Co or generate 12.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
ECB Bancorp vs. JPMorgan Chase Co
Performance |
| Timeline |
| ECB Bancorp |
| JPMorgan Chase |
ECB Bancorp and JPMorgan Chase Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECB Bancorp and JPMorgan Chase
The main advantage of trading using opposite ECB Bancorp and JPMorgan Chase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECB Bancorp 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.| ECB Bancorp vs. International Bancshares | ECB Bancorp vs. Finward Bancorp | ECB Bancorp vs. Aquagold International | ECB Bancorp vs. Thrivent High Yield |
| JPMorgan Chase vs. Citigroup | JPMorgan Chase vs. Aquagold International | JPMorgan Chase vs. Thrivent High Yield | JPMorgan Chase vs. Morningstar Unconstrained Allocation |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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