Correlation Between JPMorgan Chase and First Business
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and First Business 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 First Business 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 First Business Financial, you can compare the effects of market volatilities on JPMorgan Chase and First Business 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 First Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and First Business.
Diversification Opportunities for JPMorgan Chase and First Business
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between JPMorgan and First is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and First Business Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Business 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 First Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Business Financial has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and First Business go up and down completely randomly.
Pair Corralation between JPMorgan Chase and First Business
Considering the 90-day investment horizon JPMorgan Chase is expected to generate 1.27 times less return on investment than First Business. But when comparing it to its historical volatility, JPMorgan Chase Co is 1.18 times less risky than First Business. It trades about 0.24 of its potential returns per unit of risk. First Business Financial is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 4,266 in First Business Financial on September 3, 2024 and sell it today you would earn a total of 746.00 from holding First Business Financial or generate 17.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan Chase Co vs. First Business Financial
Performance |
| Timeline |
| JPMorgan Chase |
| First Business Financial |
JPMorgan Chase and First Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Chase and First Business
The main advantage of trading using opposite JPMorgan Chase and First Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, First Business 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 First Business will offset losses from the drop in First Business' long position.| JPMorgan Chase vs. Partner Communications | JPMorgan Chase vs. Merck Company | JPMorgan Chase vs. Western Midstream Partners | JPMorgan Chase vs. Edgewise Therapeutics |
| First Business vs. JPMorgan Chase Co | First Business vs. Citigroup | First Business vs. Wells Fargo | First Business vs. Toronto Dominion Bank |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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