Correlation Between JPMorgan Chase and Banco Santander
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and Banco Santander 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 Banco Santander 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 Banco Santander SA, you can compare the effects of market volatilities on JPMorgan Chase and Banco Santander 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 Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and Banco Santander.
Diversification Opportunities for JPMorgan Chase and Banco Santander
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between JPMorgan and Banco is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Banco Santander SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander SA 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 Banco Santander. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Santander SA has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Banco Santander go up and down completely randomly.
Pair Corralation between JPMorgan Chase and Banco Santander
Assuming the 90 days trading horizon JPMorgan Chase Co is expected to generate 0.24 times more return on investment than Banco Santander. However, JPMorgan Chase Co is 4.12 times less risky than Banco Santander. It trades about 0.14 of its potential returns per unit of risk. Banco Santander SA is currently generating about -0.11 per unit of risk. If you would invest 2,491 in JPMorgan Chase Co on August 27, 2024 and sell it today you would earn a total of 38.00 from holding JPMorgan Chase Co or generate 1.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan Chase Co vs. Banco Santander SA
Performance |
| Timeline |
| JPMorgan Chase |
| Banco Santander SA |
JPMorgan Chase and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Chase and Banco Santander
The main advantage of trading using opposite JPMorgan Chase and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, Banco Santander 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 Banco Santander will offset losses from the drop in Banco Santander's long position.| JPMorgan Chase vs. Bank of America | JPMorgan Chase vs. Bank of America | JPMorgan Chase vs. Bank of America | JPMorgan Chase vs. JPMorgan Chase Co |
| Banco Santander vs. Barclays PLC ADR | Banco Santander vs. ING Group NV | Banco Santander vs. HSBC Holdings PLC | Banco Santander vs. Natwest Group PLC |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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