Correlation Between JPMorgan Chase and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and Goldman Sachs 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 Goldman Sachs 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 Goldman Sachs Group, you can compare the effects of market volatilities on JPMorgan Chase and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and Goldman Sachs.
Diversification Opportunities for JPMorgan Chase and Goldman Sachs
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between JPMorgan and Goldman is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Goldman Sachs Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Group 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Group has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Goldman Sachs go up and down completely randomly.
Pair Corralation between JPMorgan Chase and Goldman Sachs
Considering the 90-day investment horizon JPMorgan Chase is expected to generate 1.7 times less return on investment than Goldman Sachs. In addition to that, JPMorgan Chase is 1.02 times more volatile than Goldman Sachs Group. It trades about 0.06 of its total potential returns per unit of risk. Goldman Sachs Group is currently generating about 0.1 per unit of volatility. If you would invest 38,173 in Goldman Sachs Group on January 17, 2024 and sell it today you would earn a total of 1,915 from holding Goldman Sachs Group or generate 5.02% 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. Goldman Sachs Group
Performance |
| Timeline |
| JPMorgan Chase |
| Goldman Sachs Group |
JPMorgan Chase and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Chase and Goldman Sachs
The main advantage of trading using opposite JPMorgan Chase and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| JPMorgan Chase vs. Citigroup | JPMorgan Chase vs. Wells Fargo | JPMorgan Chase vs. Toronto Dominion Bank | JPMorgan Chase vs. Nu Holdings |
| Goldman Sachs vs. JPMorgan Chase Co | Goldman Sachs vs. Wells Fargo | Goldman Sachs vs. Citigroup | Goldman Sachs vs. American Express |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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