Correlation Between JP Morgan and Black Knight

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

Diversification Opportunities for JP Morgan and Black Knight

-0.65
  Correlation Coefficient

Excellent diversification

The 3 months correlation between JP Morgan and Black is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding JP Morgan Chase and Black Knight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Knight 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 Black Knight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Knight has no effect on the direction of JP Morgan i.e., JP Morgan and Black Knight go up and down completely randomly.

Pair Corralation between JP Morgan and Black Knight

Considering the 90-day investment horizon JP Morgan Chase is expected to generate 0.86 times more return on investment than Black Knight. However, JP Morgan Chase is 1.17 times less risky than Black Knight. It trades about -0.01 of its potential returns per unit of risk. Black Knight is currently generating about -0.02 per unit of risk. If you would invest  15,341  in JP Morgan Chase on August 31, 2022 and sell it today you would lose (1,906)  from holding JP Morgan Chase or give up 12.42% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

JP Morgan Chase  vs.  Black Knight

 Performance (%) 
       Timeline  
JP Morgan Chase 
JP Morgan Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in JP Morgan Chase are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, JP Morgan revealed solid returns over the last few months and may actually be approaching a breakup point.

JP Morgan Price Channel

Black Knight 
Black Performance
0 of 100
Over the last 90 days Black Knight has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest sluggish performance, the Stock's forward-looking signals remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Black Price Channel

JP Morgan and Black Knight Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JP Morgan and Black Knight

The main advantage of trading using opposite JP Morgan and Black Knight positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JP Morgan position performs unexpectedly, Black Knight 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 Black Knight will offset losses from the drop in Black Knight's long position.
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The idea behind JP Morgan Chase and Black Knight 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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