Correlation Between GOLDMAN SACHS and JPMorgan Chase

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

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

Diversification Opportunities for GOLDMAN SACHS and JPMorgan Chase

0.98

Correlation Coefficient

GOLDMAN SACHS  JPMorgan Chase

Almost no diversification

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

Pair Corralation between GOLDMAN SACHS and JPMorgan Chase

Assuming the 90 days trading horizon GOLDMAN SACHS CDR is expected to under-perform the JPMorgan Chase. In addition to that, GOLDMAN SACHS is 1.2 times more volatile than JPMorgan Chase Co. It trades about -0.2 of its total potential returns per unit of risk. JPMorgan Chase Co is currently generating about -0.22 per unit of volatility. If you would invest  3,332  in JPMorgan Chase Co on September 24, 2024 and sell it today you would lose (176.00) from holding JPMorgan Chase Co or give up 5.28% of portfolio value over 90 days.

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

GOLDMAN SACHS CDR  vs.  JPMorgan Chase Co

GOLDMAN SACHS CDR

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GOLDMAN SACHS CDR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, GOLDMAN SACHS displayed solid returns over the last few months and may actually be approaching a breakup point.

JPMorgan Chase

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, JPMorgan Chase displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GOLDMAN SACHS and JPMorgan Chase

The main advantage of trading using opposite GOLDMAN SACHS and JPMorgan Chase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOLDMAN SACHS 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 GOLDMAN SACHS CDR 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.