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2 Pair Trades: Goldman Over JPMorgan, Schwab Over Raymond James

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2 Pair Trades: Goldman Over JPMorgan, Schwab Over Raymond James

In a new report, Nomura analyst Steven Chubak suggested two potential financial pair trades for investors who want to hedge against market weakness in 2016.

Trade 1: Long Goldman Sachs Group Inc (NYSE: GS)/Short JPMorgan Chase & Co. (NYSE: JPM)

Chubak sees similar downside risks for the two stocks, but believes that Goldman has significantly more upside. “We are upgrading GS as we see a better risk/reward skew vs. JPM,” he explained.

In the report, Nomura upgraded Goldman from Neutral to Buy and downgraded JPMorgan from Buy to Neutral.

Related Link: We Currently Face A 20% Chance Of Recession

Trade 2: Long Charles Schwab Corp (NYSE: SCHW)/Short Raymond James Financial, Inc. (NYSE: RJF)

Chubak justified the second pair trade using similar logic. “While SCHW is not immune to bear case impacts (e.g., no further rate hikes, equity market declines), our analysis yields only slightly more downside vs. RJF, with much greater upside potential at SCHW as the macro backdrop improves.”

Nomura has upgraded Schwab from Neutral to Buy and downgraded Raymond James from Buy to Neutral.

Disclosure: The author holds no position in the stocks mentioned.

Image Credit: Public Domain

Latest Ratings for GS

DateFirmActionFromTo
Oct 2020Credit SuisseMaintainsOutperform
Oct 2020BMO CapitalMaintainsOutperform
Oct 2020B of A SecuritiesMaintainsBuy

View More Analyst Ratings for GS
View the Latest Analyst Ratings

 

Related Articles (GS + JPM)

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