Correlation Between JPMorgan Chase and UBS Group

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

Diversification Opportunities for JPMorgan Chase and UBS Group

0.59

Correlation Coefficient

JPMorgan Chase  UBS Group

Very weak diversification

The 3 months correlation between JPMorgan and UBS is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and UBS Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS Group AG 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 UBS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS Group AG has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and UBS Group go up and down completely randomly.

Pair Corralation between JPMorgan Chase and UBS Group

Assuming the 90 days trading horizon JPMorgan Chase Co is expected to under-perform the UBS Group. But the stock apears to be less risky and, when comparing its historical volatility, JPMorgan Chase Co is 1.17 times less risky than UBS Group. The stock trades about -0.04 of its potential returns per unit of risk. The UBS Group AG is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  19,019  in UBS Group AG on December 29, 2024 and sell it today you would lose (819.00) from holding UBS Group AG or give up 4.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

JPMorgan Chase Co  vs.  UBS Group AG

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 somewhat strong primary indicators, JPMorgan Chase is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

UBS Group AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days UBS Group AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, UBS Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JPMorgan Chase and UBS Group

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

The idea behind JPMorgan Chase Co and UBS Group AG 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.