Correlation Between JPMorgan Chase and Banco Santander

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

Diversification Opportunities for JPMorgan Chase and Banco Santander

0.27

Correlation Coefficient

JPMorgan Chase  Banco Santander

Modest diversification

The 3 months correlation between JPMorgan and Banco is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Banco Santander SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander SA 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 Banco Santander. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Santander SA has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Banco Santander go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Banco Santander

Assuming the 90 days trading horizon JPMorgan Chase Co is expected to generate 1.34 times more return on investment than Banco Santander. However, JPMorgan Chase is 1.34 times more volatile than Banco Santander SA. It trades about 0.15 of its potential returns per unit of risk. Banco Santander SA is currently generating about 0.04 per unit of risk. If you would invest  19,424  in JPMorgan Chase Co on September 5, 2024 and sell it today you would earn a total of  3,991  from holding JPMorgan Chase Co or generate 20.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

JPMorgan Chase Co  vs.  Banco Santander SA

JPMorgan Chase

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, JPMorgan Chase unveiled solid returns over the last few months and may actually be approaching a breakup point.

Banco Santander SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Santander SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Banco Santander is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with JPMorgan Chase and Banco Santander

The main advantage of trading using opposite JPMorgan Chase and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, Banco Santander 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 Banco Santander will offset losses from the drop in Banco Santander's long position.

The idea behind JPMorgan Chase Co and Banco Santander SA 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.