Correlation Between JPMorgan Ultra and Schwab Strategic

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

By analyzing existing cross correlation between JPMorgan Ultra Short Income and Schwab Strategic Trust, you can compare the effects of market volatilities on JPMorgan Ultra and Schwab Strategic 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 JPMorgan Ultra with a short position of Schwab Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Ultra and Schwab Strategic.

Diversification Opportunities for JPMorgan Ultra and Schwab Strategic

0.9

Correlation Coefficient

JPMorgan Ultra  Schwab Strategic

Almost no diversification

The 3 months correlation between JPMorgan and Schwab is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Ultra Short Income and Schwab Strategic Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Strategic Trust and JPMorgan Ultra 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 JPMorgan Ultra Short Income are associated (or correlated) with Schwab Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Strategic Trust has no effect on the direction of JPMorgan Ultra i.e., JPMorgan Ultra and Schwab Strategic go up and down completely randomly.

Pair Corralation between JPMorgan Ultra and Schwab Strategic

Given the investment horizon of 90 days JPMorgan Ultra Short Income is expected to generate 0.73 times more return on investment than Schwab Strategic. However, JPMorgan Ultra Short Income is 1.38 times less risky than Schwab Strategic. It trades about 0.6 of its potential returns per unit of risk. Schwab Strategic Trust is currently generating about 0.39 per unit of risk. If you would invest  5,000  in JPMorgan Ultra Short Income on December 30, 2024 and sell it today you would earn a total of  62.00  from holding JPMorgan Ultra Short Income or generate 1.24% return on investment over 90 days.

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

JPMorgan Ultra Short Income  vs.  Schwab Strategic Trust

JPMorgan Ultra Short

Risk-Adjusted Performance

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Ultra Short Income are ranked lower than 47 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, JPMorgan Ultra is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Schwab Strategic Trust

Risk-Adjusted Performance

Very Strong

Over the last 90 days Schwab Strategic Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Schwab Strategic 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 JPMorgan Ultra and Schwab Strategic

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

The idea behind JPMorgan Ultra Short Income and Schwab Strategic Trust 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.