Correlation Between JPMorgan Chase and Stifel Financial

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

Diversification Opportunities for JPMorgan Chase and Stifel Financial

0.61

Correlation Coefficient

JPMorgan Chase  Stifel Financial

Poor diversification

The 3 months correlation between JPMorgan and Stifel is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Stifel Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stifel Financial Corp 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 Stifel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stifel Financial Corp has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Stifel Financial go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Stifel Financial

Assuming the 90 days trading horizon JPMorgan Chase Co is expected to generate 1.19 times more return on investment than Stifel Financial. However, JPMorgan Chase is 1.19 times more volatile than Stifel Financial Corp. It trades about 0.0 of its potential returns per unit of risk. Stifel Financial Corp is currently generating about -0.04 per unit of risk. If you would invest  1,987  in JPMorgan Chase Co on December 30, 2024 and sell it today you would lose (3.00) from holding JPMorgan Chase Co or give up 0.15% of portfolio value over 90 days.

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

JPMorgan Chase Co  vs.  Stifel Financial Corp

JPMorgan Chase

Risk-Adjusted Performance

Very Weak

Over the last 90 days JPMorgan Chase Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, JPMorgan Chase is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Stifel Financial Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with JPMorgan Chase and Stifel Financial

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

The idea behind JPMorgan Chase Co and Stifel Financial Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..