Correlation Between PennyMac Finl and JPMorgan Chase

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

Diversification Opportunities for PennyMac Finl and JPMorgan Chase

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between PennyMac and JPMorgan is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Finl Svcs and JPMorgan Chase Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Chase and PennyMac Finl 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 PennyMac Finl Svcs 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 PennyMac Finl i.e., PennyMac Finl and JPMorgan Chase go up and down completely randomly.

Pair Corralation between PennyMac Finl and JPMorgan Chase

Given the investment horizon of 90 days PennyMac Finl is expected to generate 1.17 times less return on investment than JPMorgan Chase. In addition to that, PennyMac Finl is 1.75 times more volatile than JPMorgan Chase Co. It trades about 0.2 of its total potential returns per unit of risk. JPMorgan Chase Co is currently generating about 0.41 per unit of volatility. If you would invest  18,345  in JPMorgan Chase Co on December 29, 2023 and sell it today you would earn a total of  1,607  from holding JPMorgan Chase Co or generate 8.76% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

PennyMac Finl Svcs  vs.  JPMorgan Chase Co

 Performance 
       Timeline  
PennyMac Finl Svcs 

Risk-Adjusted Performance

3 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in PennyMac Finl Svcs are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, PennyMac Finl is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.
JPMorgan Chase 

Risk-Adjusted Performance

25 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, JPMorgan Chase displayed solid returns over the last few months and may actually be approaching a breakup point.

PennyMac Finl and JPMorgan Chase Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PennyMac Finl and JPMorgan Chase

The main advantage of trading using opposite PennyMac Finl and JPMorgan Chase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennyMac Finl 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.
The idea behind PennyMac Finl Svcs 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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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 Anywhere module to track or share privately all of your investments from the convenience of any device.

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