Correlation Between AJ Bell and St Jamess

Can any of the company-specific risk be diversified away by investing in both AJ Bell and St Jamess 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 AJ Bell and St Jamess into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AJ Bell plc and St Jamess Place, you can compare the effects of market volatilities on AJ Bell and St Jamess 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 AJ Bell with a short position of St Jamess. Check out your portfolio center. Please also check ongoing floating volatility patterns of AJ Bell and St Jamess.

Diversification Opportunities for AJ Bell and St Jamess

0.82

Correlation Coefficient

AJ Bell  St Jamess

Very poor diversification

The 3 months correlation between AJB and STJ is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding AJ Bell plc and St Jamess Place in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on St Jamess Place and AJ Bell 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 AJ Bell plc are associated (or correlated) with St Jamess. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of St Jamess Place has no effect on the direction of AJ Bell i.e., AJ Bell and St Jamess go up and down completely randomly.

Pair Corralation between AJ Bell and St Jamess

Assuming the 90 days trading horizon AJ Bell is expected to generate 2.8 times less return on investment than St Jamess. But when comparing it to its historical volatility, AJ Bell plc is 1.67 times less risky than St Jamess. It trades about 0.1 of its potential returns per unit of risk. St Jamess Place is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  49,057  in St Jamess Place on August 25, 2024 and sell it today you would earn a total of  34,993  from holding St Jamess Place or generate 71.33% return on investment over 90 days.

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

AJ Bell plc  vs.  St Jamess Place

AJ Bell plc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AJ Bell plc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, AJ Bell is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

St Jamess Place

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in St Jamess Place are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, St Jamess exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AJ Bell and St Jamess

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

The idea behind AJ Bell plc and St Jamess Place 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.