JPMorgan Quants Develop Model for Socially Responsible Investing
In a further sign that socially responsible investing is going mainstream, JPMorgan Chase & Co. have developed a quantitative tool to help investors pick compliant stocks.
Strategists at the firm have built an “ESGQ” quantitative metric that combines a company’s long-term corporate responsibility score with faster-moving data that isolates newsflow on potential controversies. The analysis then tracks momentum in the ESG scores to measure changes in market sentiment and price behavior.
According to JPMorgan, their quantitative approach could help improve returns in the environmental, social and governance (ESG) space.