Correlation Between Old Second and JPMorgan Chase
Can any of the company-specific risk be diversified away by investing in both Old Second and JPMorgan Chase 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 Old Second and JPMorgan Chase into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Second Bancorp and JPMorgan Chase Co, you can compare the effects of market volatilities on Old Second and JPMorgan Chase 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 Old Second with a short position of JPMorgan Chase. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Second and JPMorgan Chase.
Diversification Opportunities for Old Second and JPMorgan Chase
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Old and JPMorgan is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Old Second Bancorp and JPMorgan Chase Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Chase and Old Second 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 Old Second Bancorp are associated (or correlated) with JPMorgan Chase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Chase has no effect on the direction of Old Second i.e., Old Second and JPMorgan Chase go up and down completely randomly.
Pair Corralation between Old Second and JPMorgan Chase
Given the investment horizon of 90 days Old Second Bancorp is expected to under-perform the JPMorgan Chase. But the stock apears to be less risky and, when comparing its historical volatility, Old Second Bancorp is 1.07 times less risky than JPMorgan Chase. The stock trades about -0.02 of its potential returns per unit of risk. The JPMorgan Chase Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 23,956 in JPMorgan Chase Co on September 13, 2024 and sell it today you would earn a total of 278.00 from holding JPMorgan Chase Co or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Second Bancorp vs. JPMorgan Chase Co
Performance |
| Timeline |
| Old Second Bancorp |
| JPMorgan Chase |
Old Second and JPMorgan Chase Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Second and JPMorgan Chase
The main advantage of trading using opposite Old Second and JPMorgan Chase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Second position performs unexpectedly, JPMorgan Chase 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 JPMorgan Chase will offset losses from the drop in JPMorgan Chase's long position.| Old Second vs. Ohio Valley Banc | Old Second vs. Peoples Bancorp | Old Second vs. OceanFirst Financial Corp | Old Second vs. QCR Holdings |
| JPMorgan Chase vs. Citigroup | JPMorgan Chase vs. Nu Holdings | JPMorgan Chase vs. HSBC Holdings PLC | JPMorgan Chase vs. Canadian Imperial 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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