Correlation Between JPMorgan Chase and William Penn

Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and William Penn 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 William Penn 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 William Penn Bancorp, you can compare the effects of market volatilities on JPMorgan Chase and William Penn 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 William Penn. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and William Penn.

Diversification Opportunities for JPMorgan Chase and William Penn

0.86

Correlation Coefficient

JPMorgan Chase  William Penn

Very poor diversification

The 3 months correlation between JPMorgan and William is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and William Penn Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on William Penn Bancorp 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 William Penn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of William Penn Bancorp has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and William Penn go up and down completely randomly.

Pair Corralation between JPMorgan Chase and William Penn

Considering the 90-day investment horizon JPMorgan Chase Co is expected to generate 1.58 times more return on investment than William Penn. However, JPMorgan Chase is 1.58 times more volatile than William Penn Bancorp. It trades about 0.11 of its potential returns per unit of risk. William Penn Bancorp is currently generating about 0.15 per unit of risk. If you would invest  21,896  in JPMorgan Chase Co on September 3, 2024 and sell it today you would earn a total of  3,076  from holding JPMorgan Chase Co or generate 14.05% return on investment over 90 days.

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

JPMorgan Chase Co  vs.  William Penn Bancorp

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 fragile basic indicators, JPMorgan Chase displayed solid returns over the last few months and may actually be approaching a breakup point.

William Penn Bancorp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in William Penn Bancorp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, William Penn may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with JPMorgan Chase and William Penn

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

The idea behind JPMorgan Chase Co and William Penn Bancorp 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.