Correlation Between Consumer Services and James Small

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

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

Diversification Opportunities for Consumer Services and James Small

0.38

Correlation Coefficient

Consumer Services  James Small

Weak diversification

The 3 months correlation between Consumer and James is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Services Ultrasector and James Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James Small Cap and Consumer Services 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 Consumer Services Ultrasector are associated (or correlated) with James Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James Small Cap has no effect on the direction of Consumer Services i.e., Consumer Services and James Small go up and down completely randomly.

Pair Corralation between Consumer Services and James Small

Assuming the 90 days horizon Consumer Services is expected to generate 1.31 times less return on investment than James Small. In addition to that, Consumer Services is 1.84 times more volatile than James Small Cap. It trades about 0.01 of its total potential returns per unit of risk. James Small Cap is currently generating about 0.03 per unit of volatility. If you would invest  4,296  in James Small Cap on September 6, 2025 and sell it today you would earn a total of  63.00  from holding James Small Cap or generate 1.47% return on investment over 90 days.

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

Consumer Services Ultrasector  vs.  James Small Cap

Consumer Services

Risk-Adjusted Performance

Weak

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

James Small Cap

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in James Small Cap are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, James Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Consumer Services and James Small

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

The idea behind Consumer Services Ultrasector and James Small Cap 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.

Check out your portfolio center.

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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.