Correlation Between JPMorgan Chase and Farmers Merchants
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and Farmers Merchants 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 Farmers Merchants 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 Farmers Merchants Bancorp, you can compare the effects of market volatilities on JPMorgan Chase and Farmers Merchants 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 Farmers Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and Farmers Merchants.
Diversification Opportunities for JPMorgan Chase and Farmers Merchants
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between JPMorgan and Farmers is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Farmers Merchants Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Merchants 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 Farmers Merchants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Merchants Bancorp has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Farmers Merchants go up and down completely randomly.
Pair Corralation between JPMorgan Chase and Farmers Merchants
Considering the 90-day investment horizon JPMorgan Chase is expected to generate 1.54 times less return on investment than Farmers Merchants. But when comparing it to its historical volatility, JPMorgan Chase Co is 1.09 times less risky than Farmers Merchants. It trades about 0.21 of its potential returns per unit of risk. Farmers Merchants Bancorp is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 2,781 in Farmers Merchants Bancorp on September 4, 2024 and sell it today you would earn a total of 539.00 from holding Farmers Merchants Bancorp or generate 19.38% 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. Farmers Merchants Bancorp
Performance |
| Timeline |
| JPMorgan Chase |
| Farmers Merchants Bancorp |
JPMorgan Chase and Farmers Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Chase and Farmers Merchants
The main advantage of trading using opposite JPMorgan Chase and Farmers Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, Farmers Merchants 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 Farmers Merchants will offset losses from the drop in Farmers Merchants' long position.| JPMorgan Chase vs. Citigroup | JPMorgan Chase vs. Aquagold International | JPMorgan Chase vs. Thrivent High Yield | JPMorgan Chase vs. Morningstar Unconstrained Allocation |
| Farmers Merchants vs. Home Federal Bancorp | Farmers Merchants vs. First Financial Northwest | Farmers Merchants vs. First Northwest Bancorp | Farmers Merchants vs. First Capital |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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