Correlation Between National Bankshares and JPMorgan Chase

Can any of the company-specific risk be diversified away by investing in both National Bankshares 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 National Bankshares and JPMorgan Chase into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between National Bankshares and JPMorgan Chase Co, you can compare the effects of market volatilities on National Bankshares 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 National Bankshares with a short position of JPMorgan Chase. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bankshares and JPMorgan Chase.

Diversification Opportunities for National Bankshares and JPMorgan Chase

0.52

Correlation Coefficient

National Bankshares  JPMorgan Chase

Very weak diversification

The 3 months correlation between National and JPMorgan is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding National Bankshares and JPMorgan Chase Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Chase and National Bankshares 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 National Bankshares 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 National Bankshares i.e., National Bankshares and JPMorgan Chase go up and down completely randomly.

Pair Corralation between National Bankshares and JPMorgan Chase

Given the investment horizon of 90 days National Bankshares is expected to under-perform the JPMorgan Chase. In addition to that, National Bankshares is 1.87 times more volatile than JPMorgan Chase Co. It trades about -0.09 of its total potential returns per unit of risk. JPMorgan Chase Co is currently generating about 0.03 per unit of volatility. If you would invest  19,779  in JPMorgan Chase Co on March 31, 2024 and sell it today you would earn a total of  447.00  from holding JPMorgan Chase Co or generate 2.26% return on investment over 90 days.

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

National Bankshares  vs.  JPMorgan Chase Co

National Bankshares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Bankshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in July 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

JPMorgan Chase

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, JPMorgan Chase is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with National Bankshares and JPMorgan Chase

The main advantage of trading using opposite National Bankshares and JPMorgan Chase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bankshares 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 National Bankshares 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.