Correlation Between Bank of America and JPMorgan Chase

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Bank of America 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 Bank of America and JPMorgan Chase into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and JPMorgan Chase Co, you can compare the effects of market volatilities on Bank of America 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 Bank of America with a short position of JPMorgan Chase. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and JPMorgan Chase.

Diversification Opportunities for Bank of America and JPMorgan Chase

0.98
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Bank and JPMorgan is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and JPMorgan Chase Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Chase and Bank of America 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 Bank of America 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 Bank of America i.e., Bank of America and JPMorgan Chase go up and down completely randomly.

Pair Corralation between Bank of America and JPMorgan Chase

Assuming the 90 days trading horizon Bank of America is expected to generate 1.02 times more return on investment than JPMorgan Chase. However, Bank of America is 1.02 times more volatile than JPMorgan Chase Co. It trades about -0.07 of its potential returns per unit of risk. JPMorgan Chase Co is currently generating about -0.08 per unit of risk. If you would invest  2,019  in Bank of America on September 6, 2024 and sell it today you would lose (72.00) from holding Bank of America or give up 3.57% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy98.44%
ValuesDaily Returns

Bank of America  vs.  JPMorgan Chase Co

 Performance 
       Timeline  
Bank of America 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Bank of America has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Bank of America is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
JPMorgan Chase 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 quite persistent primary indicators, JPMorgan Chase is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Bank of America and JPMorgan Chase Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bank of America and JPMorgan Chase

The main advantage of trading using opposite Bank of America and JPMorgan Chase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America 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 Bank of America 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

Other Complementary Tools

Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance