Correlation Between International Bancshares and JPMorgan Chase

Can any of the company-specific risk be diversified away by investing in both International Bancshares 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 International Bancshares and JPMorgan Chase into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between International Bancshares and JPMorgan Chase Co, you can compare the effects of market volatilities on International Bancshares 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 International Bancshares with a short position of JPMorgan Chase. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Bancshares and JPMorgan Chase.

Diversification Opportunities for International Bancshares and JPMorgan Chase

0.83

Correlation Coefficient

International Bancshares  JPMorgan Chase

Very poor diversification

The 3 months correlation between International and JPMorgan is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding International Bancshares and JPMorgan Chase Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Chase and International Bancshares 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 International Bancshares 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 International Bancshares i.e., International Bancshares and JPMorgan Chase go up and down completely randomly.

Pair Corralation between International Bancshares and JPMorgan Chase

Given the investment horizon of 90 days International Bancshares is expected to generate 4.64 times less return on investment than JPMorgan Chase. But when comparing it to its historical volatility, International Bancshares is 1.01 times less risky than JPMorgan Chase. It trades about 0.01 of its potential returns per unit of risk. JPMorgan Chase Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  23,809  in JPMorgan Chase Co on December 29, 2024 and sell it today you would earn a total of  476.00  from holding JPMorgan Chase Co or generate 2.0% return on investment over 90 days.

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

International Bancshares  vs.  JPMorgan Chase Co

International Bancshares

Risk-Adjusted Performance

Very Weak

Over the last 90 days International Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, International Bancshares is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

JPMorgan Chase

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, JPMorgan Chase is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with International Bancshares and JPMorgan Chase

The main advantage of trading using opposite International Bancshares and JPMorgan Chase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Bancshares 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.

The idea behind International Bancshares and JPMorgan Chase Co 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .