Correlation Between JP Morgan and BNY Mellon

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

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

Diversification Opportunities for JP Morgan and BNY Mellon

1.0

Correlation Coefficient

JP Morgan  BNY Mellon

No risk reduction

The 3 months correlation between JIRE and BNY is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding JP Morgan Exchange Traded and BNY Mellon International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon International and JP Morgan 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 JP Morgan Exchange Traded are associated (or correlated) with BNY Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNY Mellon International has no effect on the direction of JP Morgan i.e., JP Morgan and BNY Mellon go up and down completely randomly.

Pair Corralation between JP Morgan and BNY Mellon

Given the investment horizon of 90 days JP Morgan Exchange Traded is expected to generate 1.01 times more return on investment than BNY Mellon. However, JP Morgan is 1.01 times more volatile than BNY Mellon International. It trades about 0.2 of its potential returns per unit of risk. BNY Mellon International is currently generating about 0.18 per unit of risk. 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  625.00  from holding JP Morgan Exchange Traded or generate 10.57% return on investment over 90 days.

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

JP Morgan Exchange Traded  vs.  BNY Mellon International

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 15 (%) 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.

BNY Mellon International

Risk-Adjusted Performance

Good

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

Pair Trading with JP Morgan and BNY Mellon

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

The idea behind JP Morgan Exchange Traded and BNY Mellon International 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.