Correlation Between JP Morgan and Canadian Imperial

By analyzing existing cross correlation between JP Morgan Chase and Canadian Imperial Bank, you can compare the effects of market volatilities on JP Morgan and Canadian Imperial 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 JP Morgan with a short position of Canadian Imperial. Check out your portfolio center. Please also check ongoing floating volatility patterns of JP Morgan and Canadian Imperial.

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Can any of the company-specific risk be diversified away by investing in both JP Morgan and Canadian Imperial 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 JP Morgan and Canadian Imperial into the same portfolio, which is an essential part of the fundamental portfolio management process.

Diversification Opportunities for JP Morgan and Canadian Imperial

0.44
  Correlation Coefficient
JP Morgan Chase
Canadian Imperial Bank

Very weak diversification

The 3 months correlation between JP Morgan and Canadian is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding JP Morgan Chase and Canadian Imperial Bank in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Canadian Imperial Bank and JP Morgan 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 JP Morgan Chase are associated (or correlated) with Canadian Imperial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Imperial Bank has no effect on the direction of JP Morgan i.e., JP Morgan and Canadian Imperial go up and down completely randomly.

Pair Corralation between JP Morgan and Canadian Imperial

Considering the 90-day investment horizon JP Morgan Chase is expected to under-perform the Canadian Imperial. But the stock apears to be less risky and, when comparing its historical volatility, JP Morgan Chase is 1.0 times less risky than Canadian Imperial. The stock trades about -0.2 of its potential returns per unit of risk. The Canadian Imperial Bank is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  11,609  in Canadian Imperial Bank on June 28, 2021 and sell it today you would lose (84.00)  from holding Canadian Imperial Bank or give up 0.72% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.0%
ValuesDaily Returns

JP Morgan Chase  vs.  Canadian Imperial Bank

 Performance (%) 
      Timeline 
JP Morgan Chase 
 JP Morgan Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in JP Morgan Chase are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady basic indicators, JP Morgan is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

JP Morgan Price Channel

Canadian Imperial Bank 
 Canadian Performance
0 of 100
Over the last 90 days Canadian Imperial Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady primary indicators, Canadian Imperial is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Canadian Price Channel

JP Morgan and Canadian Imperial Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with JP Morgan and Canadian Imperial

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

JP Morgan Chase

Pair trading matchups for JP Morgan

The idea behind JP Morgan Chase and Canadian Imperial Bank 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.

Canadian Imperial Bank

Pair trading matchups for Canadian Imperial

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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