Correlation Between Canadian Imperial and JP Morgan

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

Diversification Opportunities for Canadian Imperial and JP Morgan

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Canadian and JP Morgan is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and JP Morgan Chase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JP Morgan Chase and Canadian Imperial 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 Canadian Imperial Bank are associated (or correlated) with JP Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JP Morgan Chase has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and JP Morgan go up and down completely randomly.

Pair Corralation between Canadian Imperial and JP Morgan

Allowing for the 90-day total investment horizon Canadian Imperial Bank is expected to generate 0.75 times more return on investment than JP Morgan. However, Canadian Imperial Bank is 1.34 times less risky than JP Morgan. It trades about 0.06 of its potential returns per unit of risk. JP Morgan Chase is currently generating about 0.03 per unit of risk. If you would invest  3,146  in Canadian Imperial Bank on June 27, 2022 and sell it today you would earn a total of  1,334  from holding Canadian Imperial Bank or generate 42.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Canadian Imperial Bank  vs.  JP Morgan Chase

 Performance (%) 
       Timeline  
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 latest weak performance, the Stock's primary indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

Canadian Price Channel

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

JP Morgan Price Channel

Canadian Imperial and JP Morgan Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Canadian Imperial and JP Morgan

The main advantage of trading using opposite Canadian Imperial and JP Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Imperial position performs unexpectedly, JP Morgan 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 JP Morgan will offset losses from the drop in JP Morgan's long position.
Canadian Imperial vs. China Construction B
The idea behind Canadian Imperial Bank and JP Morgan Chase 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.
JP Morgan vs. China Construction B
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 Stock Screener module to find equities using custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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