Correlation Between JPMorgan BetaBuilders and IShares MSCI

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

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

Diversification Opportunities for JPMorgan BetaBuilders and IShares MSCI

0.24

Correlation Coefficient

JPMorgan BetaBuilders  IShares MSCI

Modest diversification

The 3 months correlation between JPMorgan and IShares is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan BetaBuilders Canada and iShares MSCI Italy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Italy and JPMorgan BetaBuilders 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 JPMorgan BetaBuilders Canada are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Italy has no effect on the direction of JPMorgan BetaBuilders i.e., JPMorgan BetaBuilders and IShares MSCI go up and down completely randomly.

Pair Corralation between JPMorgan BetaBuilders and IShares MSCI

Given the investment horizon of 90 days JPMorgan BetaBuilders is expected to generate 9.54 times less return on investment than IShares MSCI. But when comparing it to its historical volatility, JPMorgan BetaBuilders Canada is 1.11 times less risky than IShares MSCI. It trades about 0.03 of its potential returns per unit of risk. iShares MSCI Italy is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  3,598  in iShares MSCI Italy on December 29, 2024 and sell it today you would earn a total of  682.00  from holding iShares MSCI Italy or generate 18.95% return on investment over 90 days.

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

JPMorgan BetaBuilders Canada  vs.  iShares MSCI Italy

JPMorgan BetaBuilders

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan BetaBuilders Canada are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, JPMorgan BetaBuilders is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

iShares MSCI Italy

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI Italy are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, IShares MSCI demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JPMorgan BetaBuilders and IShares MSCI

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

The idea behind JPMorgan BetaBuilders Canada and iShares MSCI Italy 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.