Correlation Between Jacob Small and Schwartz Value

Can any of the company-specific risk be diversified away by investing in both Jacob Small and Schwartz Value 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 Jacob Small and Schwartz Value into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jacob Small Cap and Schwartz Value Focused, you can compare the effects of market volatilities on Jacob Small and Schwartz Value 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 Jacob Small with a short position of Schwartz Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacob Small and Schwartz Value.

Diversification Opportunities for Jacob Small and Schwartz Value

0.41

Correlation Coefficient

Jacob Small  Schwartz Value

Very weak diversification

The 3 months correlation between Jacob and Schwartz is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Jacob Small Cap and Schwartz Value Focused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwartz Value Focused and Jacob Small 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 Jacob Small Cap are associated (or correlated) with Schwartz Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwartz Value Focused has no effect on the direction of Jacob Small i.e., Jacob Small and Schwartz Value go up and down completely randomly.

Pair Corralation between Jacob Small and Schwartz Value

Assuming the 90 days horizon Jacob Small Cap is expected to generate 1.29 times more return on investment than Schwartz Value. However, Jacob Small is 1.29 times more volatile than Schwartz Value Focused. It trades about 0.07 of its potential returns per unit of risk. Schwartz Value Focused is currently generating about 0.06 per unit of risk. If you would invest  1,351  in Jacob Small Cap on December 7, 2024 and sell it today you would earn a total of  684.00  from holding Jacob Small Cap or generate 50.63% return on investment over 90 days.

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

Jacob Small Cap  vs.  Schwartz Value Focused

Jacob Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jacob Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Schwartz Value Focused

Risk-Adjusted Performance

Very Weak

Over the last 90 days Schwartz Value Focused has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Jacob Small and Schwartz Value

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

The idea behind Jacob Small Cap and Schwartz Value Focused 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.