Correlation Between JPMorgan Chase and SoFi Technologies
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and SoFi Technologies 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 SoFi Technologies 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 SoFi Technologies, you can compare the effects of market volatilities on JPMorgan Chase and SoFi Technologies 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 SoFi Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and SoFi Technologies.
Diversification Opportunities for JPMorgan Chase and SoFi Technologies
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between JPMorgan and SoFi is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and SoFi Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoFi Technologies 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 SoFi Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoFi Technologies has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and SoFi Technologies go up and down completely randomly.
Pair Corralation between JPMorgan Chase and SoFi Technologies
Considering the 90-day investment horizon JPMorgan Chase is expected to generate 13.2 times less return on investment than SoFi Technologies. But when comparing it to its historical volatility, JPMorgan Chase Co is 2.84 times less risky than SoFi Technologies. It trades about 0.06 of its potential returns per unit of risk. SoFi Technologies is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,382 in SoFi Technologies on September 13, 2024 and sell it today you would earn a total of 233.00 from holding SoFi Technologies or generate 16.86% 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. SoFi Technologies
Performance |
| Timeline |
| JPMorgan Chase |
| SoFi Technologies |
JPMorgan Chase and SoFi Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Chase and SoFi Technologies
The main advantage of trading using opposite JPMorgan Chase and SoFi Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, SoFi Technologies 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 SoFi Technologies will offset losses from the drop in SoFi Technologies' long position.| JPMorgan Chase vs. Citigroup | JPMorgan Chase vs. Nu Holdings | JPMorgan Chase vs. HSBC Holdings PLC | JPMorgan Chase vs. Bank of Montreal |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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