Correlation Between JPM Global and Sanlam Global

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

Diversification Opportunities for JPM Global and Sanlam Global

0.67

Correlation Coefficient

JPM Global  Sanlam Global

Poor diversification

The 3 months correlation between JPM and Sanlam is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding JPM Global Equity and Sanlam Global Artificial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanlam Global Artificial 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 Sanlam Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanlam Global Artificial has no effect on the direction of JPM Global i.e., JPM Global and Sanlam Global go up and down completely randomly.

Pair Corralation between JPM Global and Sanlam Global

Assuming the 90 days trading horizon JPM Global Equity is expected to generate 0.57 times more return on investment than Sanlam Global. However, JPM Global Equity is 1.76 times less risky than Sanlam Global. It trades about 0.0 of its potential returns per unit of risk. Sanlam Global Artificial is currently generating about -0.13 per unit of risk. If you would invest  401.00  in JPM Global Equity on December 27, 2024 and sell it today you would earn a total of  0.00  from holding JPM Global Equity or generate 0.0% 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.  Sanlam Global Artificial

JPM Global Equity

Risk-Adjusted Performance

Very 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.

Sanlam Global Artificial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sanlam Global Artificial has generated negative risk-adjusted returns adding no value to fund investors. Even with latest uncertain performance, the Fund's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the fund retail investors.

Pair Trading with JPM Global and Sanlam Global

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

The idea behind JPM Global Equity and Sanlam Global Artificial 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.