Correlation Between JPMorgan Chase and Home Federal

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

Diversification Opportunities for JPMorgan Chase and Home Federal

0.4

Correlation Coefficient

JPMorgan Chase  Home Federal

Very weak diversification

The 3 months correlation between JPMorgan and Home is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Home Federal Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Federal 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 Home Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Federal Bancorp has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Home Federal go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Home Federal

Considering the 90-day investment horizon JPMorgan Chase is expected to generate 1.42 times less return on investment than Home Federal. But when comparing it to its historical volatility, JPMorgan Chase Co is 1.68 times less risky than Home Federal. It trades about 0.07 of its potential returns per unit of risk. Home Federal Bancorp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,242  in Home Federal Bancorp on December 28, 2024 and sell it today you would earn a total of  66.00  from holding Home Federal Bancorp or generate 5.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	78.33%
Values	Daily Returns

JPMorgan Chase Co  vs.  Home Federal Bancorp

JPMorgan Chase

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 5 (%) 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.

Home Federal Bancorp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Home Federal Bancorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental drivers, Home Federal may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with JPMorgan Chase and Home Federal

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

The idea behind JPMorgan Chase Co and Home Federal 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.