Correlation Between JPMorgan Chase and Washington Trust
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and Washington Trust 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 Washington Trust 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 Washington Trust Bancorp, you can compare the effects of market volatilities on JPMorgan Chase and Washington Trust 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 Washington Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and Washington Trust.
Diversification Opportunities for JPMorgan Chase and Washington Trust
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between JPMorgan and Washington is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Washington Trust Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Trust 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 Washington Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Trust Bancorp has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Washington Trust go up and down completely randomly.
Pair Corralation between JPMorgan Chase and Washington Trust
Considering the 90-day investment horizon JPMorgan Chase Co is expected to generate 0.74 times more return on investment than Washington Trust. However, JPMorgan Chase Co is 1.35 times less risky than Washington Trust. It trades about 0.24 of its potential returns per unit of risk. Washington Trust Bancorp is currently generating about 0.14 per unit of risk. If you would invest 21,978 in JPMorgan Chase Co on September 3, 2024 and sell it today you would earn a total of 2,994 from holding JPMorgan Chase Co or generate 13.62% 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. Washington Trust Bancorp
Performance |
| Timeline |
| JPMorgan Chase |
| Washington Trust Bancorp |
JPMorgan Chase and Washington Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Chase and Washington Trust
The main advantage of trading using opposite JPMorgan Chase and Washington Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, Washington Trust 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 Washington Trust will offset losses from the drop in Washington Trust's long position.| JPMorgan Chase vs. Partner Communications | JPMorgan Chase vs. Merck Company | JPMorgan Chase vs. Western Midstream Partners | JPMorgan Chase vs. Edgewise Therapeutics |
| Washington Trust vs. JPMorgan Chase Co | Washington Trust vs. Citigroup | Washington Trust vs. Wells Fargo | Washington Trust 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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