Correlation Between JPMorgan Chase and US Bancorp

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

Diversification Opportunities for JPMorgan Chase and US Bancorp

0.95

Correlation Coefficient

JPMorgan Chase  US Bancorp

Almost no diversification

The 3 months correlation between JPMorgan and USB-PQ is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp 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 US Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Bancorp has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and US Bancorp go up and down completely randomly.

Pair Corralation between JPMorgan Chase and US Bancorp

Assuming the 90 days trading horizon JPMorgan Chase Co is expected to generate 0.59 times more return on investment than US Bancorp. However, JPMorgan Chase Co is 1.68 times less risky than US Bancorp. It trades about 0.03 of its potential returns per unit of risk. US Bancorp is currently generating about 0.02 per unit of risk. If you would invest  1,888  in JPMorgan Chase Co on October 7, 2024 and sell it today you would earn a total of  224.00  from holding JPMorgan Chase Co or generate 11.86% return on investment over 90 days.

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

JPMorgan Chase Co  vs.  US Bancorp

JPMorgan Chase

Risk-Adjusted Performance

0 of 100

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.

US Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, US Bancorp is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with JPMorgan Chase and US Bancorp

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

The idea behind JPMorgan Chase Co and US Bancorp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.