Correlation Between Jpmorgan Small and Wells Fargo

Can any of the company-specific risk be diversified away by investing in both Jpmorgan Small and Wells Fargo 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 Small and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jpmorgan Small Cap and Wells Fargo Growth, you can compare the effects of market volatilities on Jpmorgan Small and Wells Fargo 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 Small with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan Small and Wells Fargo.

Diversification Opportunities for Jpmorgan Small and Wells Fargo

0.9

Correlation Coefficient

Jpmorgan Small  Wells Fargo

Almost no diversification

The 3 months correlation between Jpmorgan and Wells is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Small Cap and Wells Fargo Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Growth and Jpmorgan Small 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 Small Cap are associated (or correlated) with Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wells Fargo Growth has no effect on the direction of Jpmorgan Small i.e., Jpmorgan Small and Wells Fargo go up and down completely randomly.

Pair Corralation between Jpmorgan Small and Wells Fargo

Assuming the 90 days horizon Jpmorgan Small is expected to generate 1.06 times less return on investment than Wells Fargo. In addition to that, Jpmorgan Small is 1.07 times more volatile than Wells Fargo Growth. It trades about 0.13 of its total potential returns per unit of risk. Wells Fargo Growth is currently generating about 0.15 per unit of volatility. If you would invest  4,251  in Wells Fargo Growth on September 13, 2024 and sell it today you would earn a total of  388.00  from holding Wells Fargo Growth or generate 9.13% return on investment over 90 days.

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

Jpmorgan Small Cap  vs.  Wells Fargo Growth

Jpmorgan Small Cap

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Small Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Jpmorgan Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Wells Fargo Growth

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wells Fargo Growth are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Wells Fargo may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Jpmorgan Small and Wells Fargo

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

The idea behind Jpmorgan Small Cap and Wells Fargo Growth 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 CEOs Directory module to screen CEOs from public companies around the world.