Correlation Between JPMorgan Chase and US Bancorp
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and US Bancorp 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 US Bancorp 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 US Bancorp, you can compare the effects of market volatilities on JPMorgan Chase and US Bancorp 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 US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and US Bancorp.
Diversification Opportunities for JPMorgan Chase and US Bancorp
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JPMorgan and USB-PQ is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp 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 US Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Bancorp has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and US Bancorp go up and down completely randomly.
Pair Corralation between JPMorgan Chase and US Bancorp
Assuming the 90 days trading horizon JPMorgan Chase Co is expected to generate 0.82 times more return on investment than US Bancorp. However, JPMorgan Chase Co is 1.21 times less risky than US Bancorp. It trades about -0.14 of its potential returns per unit of risk. US Bancorp is currently generating about -0.13 per unit of risk. If you would invest 2,002 in JPMorgan Chase Co on August 24, 2024 and sell it today you would lose (66.00) from holding JPMorgan Chase Co or give up 3.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan Chase Co vs. US Bancorp
Performance |
| Timeline |
| JPMorgan Chase |
| US Bancorp |
JPMorgan Chase and US Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Chase and US Bancorp
The main advantage of trading using opposite JPMorgan Chase and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, US Bancorp 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 US Bancorp will offset losses from the drop in US Bancorp's long position.| JPMorgan Chase vs. JPMorgan Chase Co | JPMorgan Chase vs. JPMorgan Chase Co | JPMorgan Chase vs. Bank of America | JPMorgan Chase vs. Wells Fargo |
| US Bancorp vs. US Bancorp | US Bancorp vs. US Bancorp | US Bancorp vs. Truist Financial | US Bancorp vs. JPMorgan Chase Co |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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