Correlation Between JPMorgan Chase and SUMITOMO

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Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and SUMITOMO 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 SUMITOMO 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 SUMITOMO MITSUI FINL, you can compare the effects of market volatilities on JPMorgan Chase and SUMITOMO 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 SUMITOMO. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and SUMITOMO.

Diversification Opportunities for JPMorgan Chase and SUMITOMO

-0.35
  Correlation Coefficient

Very good diversification

The 3 months correlation between JPMorgan and SUMITOMO is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and SUMITOMO MITSUI FINL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUMITOMO MITSUI FINL 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 SUMITOMO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUMITOMO MITSUI FINL has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and SUMITOMO go up and down completely randomly.

Pair Corralation between JPMorgan Chase and SUMITOMO

Considering the 90-day investment horizon JPMorgan Chase Co is expected to generate 4.07 times more return on investment than SUMITOMO. However, JPMorgan Chase is 4.07 times more volatile than SUMITOMO MITSUI FINL. It trades about 0.1 of its potential returns per unit of risk. SUMITOMO MITSUI FINL is currently generating about 0.01 per unit of risk. If you would invest  12,729  in JPMorgan Chase Co on August 31, 2024 and sell it today you would earn a total of  12,250  from holding JPMorgan Chase Co or generate 96.24% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.59%
ValuesDaily Returns

JPMorgan Chase Co  vs.  SUMITOMO MITSUI FINL

 Performance 
       Timeline  
JPMorgan Chase 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, JPMorgan Chase displayed solid returns over the last few months and may actually be approaching a breakup point.
SUMITOMO MITSUI FINL 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SUMITOMO MITSUI FINL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SUMITOMO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

JPMorgan Chase and SUMITOMO Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JPMorgan Chase and SUMITOMO

The main advantage of trading using opposite JPMorgan Chase and SUMITOMO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, SUMITOMO 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 SUMITOMO will offset losses from the drop in SUMITOMO's long position.
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The idea behind JPMorgan Chase Co and SUMITOMO MITSUI FINL pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Global Correlations module to find global opportunities by holding instruments from different markets.

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