Correlation Between JPMorgan Chase and Exchange Bankshares

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

Diversification Opportunities for JPMorgan Chase and Exchange Bankshares

-0.77

Correlation Coefficient

JPMorgan Chase  Exchange Bankshares

Pay attention - limited upside

The 3 months correlation between JPMorgan and Exchange is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Exchange Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Bankshares 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 Exchange Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Bankshares has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Exchange Bankshares go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Exchange Bankshares

Considering the 90-day investment horizon JPMorgan Chase is expected to generate 2.49 times less return on investment than Exchange Bankshares. In addition to that, JPMorgan Chase is 8.22 times more volatile than Exchange Bankshares. It trades about 0.03 of its total potential returns per unit of risk. Exchange Bankshares is currently generating about 0.58 per unit of volatility. If you would invest  4,775  in Exchange Bankshares on December 22, 2024 and sell it today you would earn a total of  15.00  from holding Exchange Bankshares or generate 0.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	5.0%
Values	Daily Returns

JPMorgan Chase Co  vs.  Exchange Bankshares

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 latest stock price disarray, may contribute to short-term losses for the investors.

Exchange Bankshares

Risk-Adjusted Performance

Excellent

Over the last 90 days Exchange Bankshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly weak fundamental indicators, Exchange Bankshares may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with JPMorgan Chase and Exchange Bankshares

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

The idea behind JPMorgan Chase Co and Exchange Bankshares 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.