Correlation Between BNY Mellon and JP Morgan

Can any of the company-specific risk be diversified away by investing in both BNY Mellon and JP Morgan 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 BNY Mellon and JP Morgan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BNY Mellon High and JP Morgan Exchange Traded, you can compare the effects of market volatilities on BNY Mellon and JP Morgan 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 BNY Mellon with a short position of JP Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNY Mellon and JP Morgan.

Diversification Opportunities for BNY Mellon and JP Morgan

-0.05

Correlation Coefficient

BNY Mellon  JP Morgan

Good diversification

The 3 months correlation between BNY and JIRE is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding BNY Mellon High and JP Morgan Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JP Morgan Exchange and BNY Mellon 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 BNY Mellon High are associated (or correlated) with JP Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JP Morgan Exchange has no effect on the direction of BNY Mellon i.e., BNY Mellon and JP Morgan go up and down completely randomly.

Pair Corralation between BNY Mellon and JP Morgan

Considering the 90-day investment horizon BNY Mellon is expected to generate 98.33 times less return on investment than JP Morgan. But when comparing it to its historical volatility, BNY Mellon High is 1.55 times less risky than JP Morgan. It trades about 0.0 of its potential returns per unit of risk. JP Morgan Exchange Traded is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  5,913  in JP Morgan Exchange Traded on December 26, 2024 and sell it today you would earn a total of  542.00  from holding JP Morgan Exchange Traded or generate 9.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BNY Mellon High  vs.  JP Morgan Exchange Traded

BNY Mellon High

Risk-Adjusted Performance

Weak

Over the last 90 days BNY Mellon High has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, BNY Mellon is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

JP Morgan Exchange

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JP Morgan Exchange Traded are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, JP Morgan may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BNY Mellon and JP Morgan

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

The idea behind BNY Mellon High and JP Morgan Exchange Traded 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.