Correlation Between Smithson Investment and JPMorgan Japanese

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

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

Diversification Opportunities for Smithson Investment and JPMorgan Japanese

0.8

Correlation Coefficient

Smithson Investment  JPMorgan Japanese

Very poor diversification

The 3 months correlation between Smithson and JPMorgan is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Smithson Investment Trust and JPMorgan Japanese Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Japanese and Smithson Investment 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 Smithson Investment Trust are associated (or correlated) with JPMorgan Japanese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Japanese has no effect on the direction of Smithson Investment i.e., Smithson Investment and JPMorgan Japanese go up and down completely randomly.

Pair Corralation between Smithson Investment and JPMorgan Japanese

Assuming the 90 days trading horizon Smithson Investment is expected to generate 1.51 times less return on investment than JPMorgan Japanese. But when comparing it to its historical volatility, Smithson Investment Trust is 1.19 times less risky than JPMorgan Japanese. It trades about 0.17 of its potential returns per unit of risk. JPMorgan Japanese Investment is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  57,200  in JPMorgan Japanese Investment on April 25, 2025 and sell it today you would earn a total of  7,800  from holding JPMorgan Japanese Investment or generate 13.64% return on investment over 90 days.

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

Smithson Investment Trust  vs.  JPMorgan Japanese Investment

Smithson Investment Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smithson Investment Trust are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Smithson Investment may actually be approaching a critical reversion point that can send shares even higher in August 2025.

JPMorgan Japanese

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Japanese Investment are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, JPMorgan Japanese exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Smithson Investment and JPMorgan Japanese

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

The idea behind Smithson Investment Trust and JPMorgan Japanese Investment 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.