Correlation Between JPMorgan Chase and Barclays PLC
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and Barclays PLC 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 Barclays PLC 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 Barclays PLC ADR, you can compare the effects of market volatilities on JPMorgan Chase and Barclays PLC 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 Barclays PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and Barclays PLC.
Diversification Opportunities for JPMorgan Chase and Barclays PLC
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between JPMorgan and Barclays is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Barclays PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays PLC ADR 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 Barclays PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays PLC ADR has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Barclays PLC go up and down completely randomly.
Pair Corralation between JPMorgan Chase and Barclays PLC
Considering the 90-day investment horizon JPMorgan Chase Co is expected to under-perform the Barclays PLC. But the stock apears to be less risky and, when comparing its historical volatility, JPMorgan Chase Co is 1.3 times less risky than Barclays PLC. The stock trades about -0.06 of its potential returns per unit of risk. The Barclays PLC ADR is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 942.00 in Barclays PLC ADR on January 27, 2024 and sell it today you would earn a total of 94.00 from holding Barclays PLC ADR or generate 9.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan Chase Co vs. Barclays PLC ADR
Performance |
| Timeline |
| JPMorgan Chase |
| Barclays PLC ADR |
JPMorgan Chase and Barclays PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Chase and Barclays PLC
The main advantage of trading using opposite JPMorgan Chase and Barclays PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, Barclays PLC 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 Barclays PLC will offset losses from the drop in Barclays PLC's long position.| JPMorgan Chase vs. Aquagold International | JPMorgan Chase vs. Thrivent High Yield | JPMorgan Chase vs. Morningstar Unconstrained Allocation | JPMorgan Chase vs. Via Renewables |
| Barclays PLC vs. Aquagold International | Barclays PLC vs. Thrivent High Yield | Barclays PLC vs. Morningstar Unconstrained Allocation | Barclays PLC vs. Via Renewables |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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