Correlation Between JP Morgan and BRADESCO

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

Diversification Opportunities for JP Morgan and BRADESCO

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between JP Morgan and BRADESCO is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding JP Morgan Chase and BRADESCO PN EJ N1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRADESCO PN EJ 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 BRADESCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRADESCO PN EJ has no effect on the direction of JP Morgan i.e., JP Morgan and BRADESCO go up and down completely randomly.

Pair Corralation between JP Morgan and BRADESCO

Considering the 90-day investment horizon JP Morgan is expected to generate 2.36 times less return on investment than BRADESCO. But when comparing it to its historical volatility, JP Morgan Chase is 1.15 times less risky than BRADESCO. It trades about 0.02 of its potential returns per unit of risk. BRADESCO PN EJ is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,566  in BRADESCO PN EJ on July 8, 2022 and sell it today you would earn a total of  575.00  from holding BRADESCO PN EJ or generate 36.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy98.59%
ValuesDaily Returns

JP Morgan Chase  vs.  BRADESCO PN EJ N1

 Performance (%) 
       Timeline  
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 latest stock price chaos, may contribute to medium-term losses for the stakeholders.

JP Morgan Price Channel

BRADESCO PN EJ 
BRADESCO Performance
16 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in BRADESCO PN EJ are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, BRADESCO reported solid returns over the last few months and may actually be approaching a breakup point.

BRADESCO Price Channel

JP Morgan and BRADESCO Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JP Morgan and BRADESCO

The main advantage of trading using opposite JP Morgan and BRADESCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JP Morgan position performs unexpectedly, BRADESCO 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 BRADESCO will offset losses from the drop in BRADESCO's long position.
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The idea behind JP Morgan Chase and BRADESCO PN EJ 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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