Correlation Between JPM Europe and Esfera Robotics

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

By analyzing existing cross correlation between JPM Europe Small and Esfera Robotics R, you can compare the effects of market volatilities on JPM Europe and Esfera Robotics 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 Europe with a short position of Esfera Robotics. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPM Europe and Esfera Robotics.

Diversification Opportunities for JPM Europe and Esfera Robotics

0.06

Correlation Coefficient

JPM Europe  Esfera Robotics

Significant diversification

The 3 months correlation between JPM and Esfera is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding JPM Europe Small and Esfera Robotics R in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esfera Robotics R and JPM Europe 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 Europe Small are associated (or correlated) with Esfera Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esfera Robotics R has no effect on the direction of JPM Europe i.e., JPM Europe and Esfera Robotics go up and down completely randomly.

Pair Corralation between JPM Europe and Esfera Robotics

Assuming the 90 days trading horizon JPM Europe Small is expected to generate 0.62 times more return on investment than Esfera Robotics. However, JPM Europe Small is 1.62 times less risky than Esfera Robotics. It trades about 0.13 of its potential returns per unit of risk. Esfera Robotics R is currently generating about -0.08 per unit of risk. If you would invest  8,896  in JPM Europe Small on December 23, 2024 and sell it today you would earn a total of  572.00  from holding JPM Europe Small or generate 6.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

JPM Europe Small  vs.  Esfera Robotics R

JPM Europe Small

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPM Europe Small are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather weak technical and fundamental indicators, JPM Europe may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Esfera Robotics R

Risk-Adjusted Performance

Very Weak

Over the last 90 days Esfera Robotics R has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Esfera Robotics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JPM Europe and Esfera Robotics

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

The idea behind JPM Europe Small and Esfera Robotics R 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 CEOs Directory module to screen CEOs from public companies around the world.