Correlation Between JPMorgan Chase and Charles Schwab

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

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

Diversification Opportunities for JPMorgan Chase and Charles Schwab

0.98

Correlation Coefficient

JPMorgan Chase  Charles Schwab

Almost no diversification

The 3 months correlation between JPMorgan and Charles is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and The Charles Schwab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charles Schwab and JPMorgan Chase 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 Chase Co are associated (or correlated) with Charles Schwab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charles Schwab has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Charles Schwab go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Charles Schwab

Assuming the 90 days trading horizon JPMorgan Chase Co is expected to generate 0.96 times more return on investment than Charles Schwab. However, JPMorgan Chase Co is 1.04 times less risky than Charles Schwab. It trades about -0.23 of its potential returns per unit of risk. The Charles Schwab is currently generating about -0.27 per unit of risk. If you would invest  2,260  in JPMorgan Chase Co on September 28, 2024 and sell it today you would lose (250.00) from holding JPMorgan Chase Co or give up 11.06% of portfolio value over 90 days.

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

JPMorgan Chase Co  vs.  The Charles Schwab

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 latest conflicting performance, the Preferred Stock's primary indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Charles Schwab

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Charles Schwab has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Preferred Stock's forward-looking indicators remain relatively steady which may send shares a bit higher in January 2025. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Pair Trading with JPMorgan Chase and Charles Schwab

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

The idea behind JPMorgan Chase Co and The Charles Schwab 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.