Correlation Between JPMorgan Chase and Franklin Financial
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and Franklin 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 Franklin 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 Franklin Financial Services, you can compare the effects of market volatilities on JPMorgan Chase and Franklin 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 Franklin Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and Franklin Financial.
Diversification Opportunities for JPMorgan Chase and Franklin Financial
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JPMorgan and Franklin is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Franklin Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin 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 Franklin Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Financial has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Franklin Financial go up and down completely randomly.
Pair Corralation between JPMorgan Chase and Franklin Financial
Considering the 90-day investment horizon JPMorgan Chase Co is expected to generate 4.33 times more return on investment than Franklin Financial. However, JPMorgan Chase is 4.33 times more volatile than Franklin Financial Services. It trades about 0.21 of its potential returns per unit of risk. Franklin Financial Services is currently generating about 0.21 per unit of risk. If you would invest 21,978 in JPMorgan Chase Co on September 4, 2024 and sell it today you would earn a total of 2,647 from holding JPMorgan Chase Co or generate 12.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan Chase Co vs. Franklin Financial Services
Performance |
| Timeline |
| JPMorgan Chase |
| Franklin Financial |
JPMorgan Chase and Franklin Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Chase and Franklin Financial
The main advantage of trading using opposite JPMorgan Chase and Franklin Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, Franklin 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 Franklin Financial will offset losses from the drop in Franklin Financial's long position.| JPMorgan Chase vs. Citigroup | JPMorgan Chase vs. Aquagold International | JPMorgan Chase vs. Thrivent High Yield | JPMorgan Chase vs. Morningstar Unconstrained Allocation |
| Franklin Financial vs. International Bancshares | Franklin Financial vs. Finward Bancorp | Franklin Financial vs. Aquagold International | Franklin Financial vs. Thrivent High Yield |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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