Correlation Between Bank of America and JPMorgan Active

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

By analyzing existing cross correlation between Bank of America and JPMorgan Active Value, you can compare the effects of market volatilities on Bank of America and JPMorgan Active 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 Bank of America with a short position of JPMorgan Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and JPMorgan Active.

Diversification Opportunities for Bank of America and JPMorgan Active

0.93

Correlation Coefficient

Bank of America  JPMorgan Active

Almost no diversification

The 3 months correlation between Bank and JPMorgan is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and JPMorgan Active Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Active Value and Bank of America 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 Bank of America are associated (or correlated) with JPMorgan Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Active Value has no effect on the direction of Bank of America i.e., Bank of America and JPMorgan Active go up and down completely randomly.

Pair Corralation between Bank of America and JPMorgan Active

Considering the 90-day investment horizon Bank of America is expected to generate 1.8 times more return on investment than JPMorgan Active. However, Bank of America is 1.8 times more volatile than JPMorgan Active Value. It trades about 0.1 of its potential returns per unit of risk. JPMorgan Active Value is currently generating about 0.09 per unit of risk. If you would invest  4,451  in Bank of America on May 17, 2025 and sell it today you would earn a total of  320.00  from holding Bank of America or generate 7.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Bank of America  vs.  JPMorgan Active Value

Bank of America

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of America are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Bank of America may actually be approaching a critical reversion point that can send shares even higher in September 2025.

JPMorgan Active Value

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Active Value are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, JPMorgan Active is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bank of America and JPMorgan Active

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

The idea behind Bank of America and JPMorgan Active Value 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.