Correlation Between JPMorgan Chase and Nu Holdings

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

Diversification Opportunities for JPMorgan Chase and Nu Holdings

0.91

Correlation Coefficient

JPMorgan Chase  Nu Holdings

Almost no diversification

The 3 months correlation between JPMorgan and Nu Holdings is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Nu Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nu Holdings 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 Nu Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nu Holdings has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and Nu Holdings go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Nu Holdings

Considering the 90-day investment horizon JPMorgan Chase is expected to generate 3.09 times less return on investment than Nu Holdings. But when comparing it to its historical volatility, JPMorgan Chase Co is 1.92 times less risky than Nu Holdings. It trades about 0.1 of its potential returns per unit of risk. Nu Holdings is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  356.00  in Nu Holdings on January 31, 2024 and sell it today you would earn a total of  745.00  from holding Nu Holdings or generate 209.27% return on investment over 90 days.

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

JPMorgan Chase Co  vs.  Nu Holdings

JPMorgan Chase

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, JPMorgan Chase may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Nu Holdings

Risk-Adjusted Performance

16 of 100

Solid

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

Pair Trading with JPMorgan Chase and Nu Holdings

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

The idea behind JPMorgan Chase Co and Nu Holdings 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.