Correlation Between JPM Global and Schroder Asian

Can any of the company-specific risk be diversified away by investing in both JPM Global and Schroder Asian 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 JPM Global and Schroder Asian into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JPM Global Equity and Schroder Asian Alpha, you can compare the effects of market volatilities on JPM Global and Schroder Asian 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 JPM Global with a short position of Schroder Asian. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPM Global and Schroder Asian.

Diversification Opportunities for JPM Global and Schroder Asian

0.79

Correlation Coefficient

JPM Global  Schroder Asian

Poor diversification

The 3 months correlation between JPM and Schroder is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding JPM Global Equity and Schroder Asian Alpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schroder Asian Alpha and JPM Global 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 JPM Global Equity are associated (or correlated) with Schroder Asian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schroder Asian Alpha has no effect on the direction of JPM Global i.e., JPM Global and Schroder Asian go up and down completely randomly.

Pair Corralation between JPM Global and Schroder Asian

Assuming the 90 days trading horizon JPM Global Equity is expected to generate 0.85 times more return on investment than Schroder Asian. However, JPM Global Equity is 1.18 times less risky than Schroder Asian. It trades about 0.01 of its potential returns per unit of risk. Schroder Asian Alpha is currently generating about 0.0 per unit of risk. If you would invest  397.00  in JPM Global Equity on December 28, 2024 and sell it today you would earn a total of  1.00  from holding JPM Global Equity or generate 0.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

JPM Global Equity  vs.  Schroder Asian Alpha

JPM Global Equity

Risk-Adjusted Performance

Weak

Over the last 90 days JPM Global Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, JPM Global is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Schroder Asian Alpha

Risk-Adjusted Performance

Very Weak

Over the last 90 days Schroder Asian Alpha has generated negative risk-adjusted returns adding no value to fund investors. In spite of comparatively stable basic indicators, Schroder Asian is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with JPM Global and Schroder Asian

The main advantage of trading using opposite JPM Global and Schroder Asian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPM Global position performs unexpectedly, Schroder Asian 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 Schroder Asian will offset losses from the drop in Schroder Asian's long position.

The idea behind JPM Global Equity and Schroder Asian Alpha 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.