Correlation Between Citizens Financial and JPMorgan Chase

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Can any of the company-specific risk be diversified away by investing in both Citizens Financial and JPMorgan Chase 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 Citizens Financial and JPMorgan Chase into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens Financial Group and JPMorgan Chase Co, you can compare the effects of market volatilities on Citizens Financial and JPMorgan Chase 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 Citizens Financial with a short position of JPMorgan Chase. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and JPMorgan Chase.

Diversification Opportunities for Citizens Financial and JPMorgan Chase

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Citizens and JPMorgan is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and JPMorgan Chase Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Chase and Citizens Financial 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 Citizens Financial Group are associated (or correlated) with JPMorgan Chase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Chase has no effect on the direction of Citizens Financial i.e., Citizens Financial and JPMorgan Chase go up and down completely randomly.

Pair Corralation between Citizens Financial and JPMorgan Chase

Considering the 90-day investment horizon Citizens Financial Group is expected to generate 1.3 times more return on investment than JPMorgan Chase. However, Citizens Financial is 1.3 times more volatile than JPMorgan Chase Co. It trades about 0.02 of its potential returns per unit of risk. JPMorgan Chase Co is currently generating about 0.02 per unit of risk. If you would invest  3,744  in Citizens Financial Group on October 28, 2022 and sell it today you would earn a total of  568.00  from holding Citizens Financial Group or generate 15.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Citizens Financial Group  vs.  JPMorgan Chase Co

 Performance (%) 
       Timeline  
Citizens Financial 
Citizens Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Citizens Financial may actually be approaching a critical reversion point that can send shares even higher in February 2023.

Citizens Price Channel

JPMorgan Chase 
JPMorgan Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, JPMorgan Chase may actually be approaching a critical reversion point that can send shares even higher in February 2023.

JPMorgan Price Channel

Citizens Financial and JPMorgan Chase Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citizens Financial and JPMorgan Chase

The main advantage of trading using opposite Citizens Financial and JPMorgan Chase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, JPMorgan Chase 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 Chase will offset losses from the drop in JPMorgan Chase's long position.
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The idea behind Citizens Financial Group and JPMorgan Chase Co 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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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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