Correlation Between Barclays PLC and JPMorgan Chase

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

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

Diversification Opportunities for Barclays PLC and JPMorgan Chase

-0.67

Correlation Coefficient

Barclays PLC  JPMorgan Chase

Excellent diversification

The 3 months correlation between Barclays and JPMorgan is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Barclays PLC ADR and JPMorgan Chase Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Chase and Barclays PLC 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 Barclays PLC ADR 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 Barclays PLC i.e., Barclays PLC and JPMorgan Chase go up and down completely randomly.

Pair Corralation between Barclays PLC and JPMorgan Chase

Considering the 90-day investment horizon Barclays PLC ADR is expected to generate 2.48 times more return on investment than JPMorgan Chase. However, Barclays PLC is 2.48 times more volatile than JPMorgan Chase Co. It trades about 0.12 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  1,173  in Barclays PLC ADR on September 1, 2024 and sell it today you would earn a total of  175.00  from holding Barclays PLC ADR or generate 14.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Barclays PLC ADR  vs.  JPMorgan Chase Co

Barclays PLC ADR

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Barclays PLC ADR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, Barclays PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

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

Pair Trading with Barclays PLC and JPMorgan Chase

The main advantage of trading using opposite Barclays PLC and JPMorgan Chase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays PLC 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 Barclays PLC ADR 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.