Correlation Between Schwab REIT and JPMorgan BetaBuilders

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

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

Diversification Opportunities for Schwab REIT and JPMorgan BetaBuilders

0.94

Correlation Coefficient

Schwab REIT  JPMorgan BetaBuilders

Almost no diversification

The 3 months correlation between Schwab and JPMorgan is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Schwab REIT ETF and JPMorgan BetaBuilders MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan BetaBuilders and Schwab REIT 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 Schwab REIT ETF are associated (or correlated) with JPMorgan BetaBuilders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan BetaBuilders has no effect on the direction of Schwab REIT i.e., Schwab REIT and JPMorgan BetaBuilders go up and down completely randomly.

Pair Corralation between Schwab REIT and JPMorgan BetaBuilders

Given the investment horizon of 90 days Schwab REIT is expected to generate 1.79 times less return on investment than JPMorgan BetaBuilders. But when comparing it to its historical volatility, Schwab REIT ETF is 1.04 times less risky than JPMorgan BetaBuilders. It trades about 0.01 of its potential returns per unit of risk. JPMorgan BetaBuilders MSCI is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  9,156  in JPMorgan BetaBuilders MSCI on May 7, 2025 and sell it today you would earn a total of  71.00  from holding JPMorgan BetaBuilders MSCI or generate 0.78% return on investment over 90 days.

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

Schwab REIT ETF  vs.  JPMorgan BetaBuilders MSCI

Schwab REIT ETF

Risk-Adjusted Performance

Weakest

Over the last 90 days Schwab REIT ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Schwab REIT is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

JPMorgan BetaBuilders

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan BetaBuilders MSCI are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, JPMorgan BetaBuilders is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Schwab REIT and JPMorgan BetaBuilders

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

The idea behind Schwab REIT ETF and JPMorgan BetaBuilders MSCI 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .