Correlation Between Truist Financial and JPMorgan Chase

Can any of the company-specific risk be diversified away by investing in both Truist Financial and JPMorgan Chase 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 Truist Financial and JPMorgan Chase into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Truist Financial and JPMorgan Chase Co, you can compare the effects of market volatilities on Truist Financial and JPMorgan Chase 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 Truist Financial with a short position of JPMorgan Chase. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and JPMorgan Chase.

Diversification Opportunities for Truist Financial and JPMorgan Chase

0.91

Correlation Coefficient

Truist Financial  JPMorgan Chase

Almost no diversification

The 3 months correlation between Truist and JPMorgan is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and JPMorgan Chase Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Chase and Truist Financial 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 Truist Financial are associated (or correlated) with JPMorgan Chase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Chase has no effect on the direction of Truist Financial i.e., Truist Financial and JPMorgan Chase go up and down completely randomly.

Pair Corralation between Truist Financial and JPMorgan Chase

Assuming the 90 days trading horizon Truist Financial is expected to generate 1.38 times more return on investment than JPMorgan Chase. However, Truist Financial is 1.38 times more volatile than JPMorgan Chase Co. It trades about 0.04 of its potential returns per unit of risk. JPMorgan Chase Co is currently generating about 0.05 per unit of risk. If you would invest  1,741  in Truist Financial on September 2, 2024 and sell it today you would earn a total of  364.00  from holding Truist Financial or generate 20.91% return on investment over 90 days.

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

Truist Financial  vs.  JPMorgan Chase Co

Truist Financial

Risk-Adjusted Performance

0 of 100

Very Weak

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

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. In spite of very healthy primary indicators, JPMorgan Chase is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Truist Financial and JPMorgan Chase

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

The idea behind Truist Financial and JPMorgan Chase Co 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.

Check out your portfolio center.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.