Correlation Between JPMorgan Chase and Discover Financial
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and Discover Financial 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 Discover Financial 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 Discover Financial Services, you can compare the effects of market volatilities on JPMorgan Chase and Discover Financial 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 Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and Discover Financial.
Diversification Opportunities for JPMorgan Chase and Discover Financial
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between JPMorgan and Discover is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial 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 Discover Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discover Financial has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Discover Financial go up and down completely randomly.
Pair Corralation between JPMorgan Chase and Discover Financial
Considering the 90-day investment horizon JPMorgan Chase is expected to generate 1.07 times less return on investment than Discover Financial. But when comparing it to its historical volatility, JPMorgan Chase Co is 1.65 times less risky than Discover Financial. It trades about 0.1 of its potential returns per unit of risk. Discover Financial Services is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 9,223 in Discover Financial Services on September 12, 2024 and sell it today you would earn a total of 8,352 from holding Discover Financial Services or generate 90.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan Chase Co vs. Discover Financial Services
Performance |
| Timeline |
| JPMorgan Chase |
| Discover Financial |
JPMorgan Chase and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Chase and Discover Financial
The main advantage of trading using opposite JPMorgan Chase and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, Discover Financial 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 Discover Financial will offset losses from the drop in Discover Financial's long position.| JPMorgan Chase vs. Bank of America | JPMorgan Chase vs. Victory Integrity Smallmid Cap | JPMorgan Chase vs. Hilton Worldwide Holdings | JPMorgan Chase vs. NVIDIA |
| Discover Financial vs. Victory Integrity Smallmid Cap | Discover Financial vs. Hilton Worldwide Holdings | Discover Financial vs. NVIDIA | Discover Financial 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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