Correlation Between JPMorgan Chase and BNY Mellon
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and BNY Mellon 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 BNY Mellon 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 BNY Mellon Large, you can compare the effects of market volatilities on JPMorgan Chase and BNY Mellon 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 BNY Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and BNY Mellon.
Diversification Opportunities for JPMorgan Chase and BNY Mellon
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between JPMorgan and BNY is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and BNY Mellon Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon Large 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 BNY Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNY Mellon Large has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and BNY Mellon go up and down completely randomly.
Pair Corralation between JPMorgan Chase and BNY Mellon
Considering the 90-day investment horizon JPMorgan Chase Co is expected to generate 2.05 times more return on investment than BNY Mellon. However, JPMorgan Chase is 2.05 times more volatile than BNY Mellon Large. It trades about 0.11 of its potential returns per unit of risk. BNY Mellon Large is currently generating about 0.14 per unit of risk. If you would invest 19,949 in JPMorgan Chase Co on September 1, 2024 and sell it today you would earn a total of 5,023 from holding JPMorgan Chase Co or generate 25.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
JPMorgan Chase Co vs. BNY Mellon Large
Performance |
| Timeline |
| JPMorgan Chase |
| BNY Mellon Large |
JPMorgan Chase and BNY Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Chase and BNY Mellon
The main advantage of trading using opposite JPMorgan Chase and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, BNY Mellon 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 BNY Mellon will offset losses from the drop in BNY Mellon's long position.| JPMorgan Chase vs. Citigroup | JPMorgan Chase vs. Nu Holdings | JPMorgan Chase vs. HSBC Holdings PLC | JPMorgan Chase vs. Bank of Montreal |
| BNY Mellon vs. Vanguard Total Stock | BNY Mellon vs. SPDR SP 500 | BNY Mellon vs. iShares Core SP | BNY Mellon vs. Vanguard Dividend Appreciation |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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