Correlation Between JPMorgan Chase and BAE Systems

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

Diversification Opportunities for JPMorgan Chase and BAE Systems

0.35

Correlation Coefficient

JPMorgan Chase  BAE Systems

Weak diversification

The 3 months correlation between JPMorgan and BAE is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and BAE Systems PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAE Systems PLC 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 BAE Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAE Systems PLC has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and BAE Systems go up and down completely randomly.

Pair Corralation between JPMorgan Chase and BAE Systems

Considering the 90-day investment horizon JPMorgan Chase Co is expected to generate 0.56 times more return on investment than BAE Systems. However, JPMorgan Chase Co is 1.8 times less risky than BAE Systems. It trades about 0.21 of its potential returns per unit of risk. BAE Systems PLC is currently generating about 0.02 per unit of risk. If you would invest  25,135  in JPMorgan Chase Co on May 5, 2025 and sell it today you would earn a total of  3,802  from holding JPMorgan Chase Co or generate 15.13% return on investment over 90 days.

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

JPMorgan Chase Co  vs.  BAE Systems PLC

JPMorgan Chase

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, JPMorgan Chase displayed solid returns over the last few months and may actually be approaching a breakup point.

BAE Systems PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BAE Systems PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, BAE Systems is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JPMorgan Chase and BAE Systems

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

The idea behind JPMorgan Chase Co and BAE Systems PLC 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.