Correlation Between JPMorgan BetaBuilders and IShares Equity

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

By analyzing existing cross correlation between JPMorgan BetaBuilders International and iShares Equity Factor, you can compare the effects of market volatilities on JPMorgan BetaBuilders and IShares Equity 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 Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan BetaBuilders and IShares Equity.

Diversification Opportunities for JPMorgan BetaBuilders and IShares Equity

-0.59

Correlation Coefficient

JPMorgan BetaBuilders  IShares Equity

Excellent diversification

The 3 months correlation between JPMorgan and IShares is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan BetaBuilders Internat and iShares Equity Factor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Equity Factor 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 International are associated (or correlated) with IShares Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Equity Factor has no effect on the direction of JPMorgan BetaBuilders i.e., JPMorgan BetaBuilders and IShares Equity go up and down completely randomly.

Pair Corralation between JPMorgan BetaBuilders and IShares Equity

Given the investment horizon of 90 days JPMorgan BetaBuilders International is expected to under-perform the IShares Equity. In addition to that, JPMorgan BetaBuilders is 1.28 times more volatile than iShares Equity Factor. It trades about -0.09 of its total potential returns per unit of risk. iShares Equity Factor is currently generating about 0.16 per unit of volatility. If you would invest  5,751  in iShares Equity Factor on August 30, 2024 and sell it today you would earn a total of  471.00  from holding iShares Equity Factor or generate 8.19% return on investment over 90 days.

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

JPMorgan BetaBuilders Internat  vs.  iShares Equity Factor

JPMorgan BetaBuilders

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMorgan BetaBuilders International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, JPMorgan BetaBuilders is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

iShares Equity Factor

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Equity Factor are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, IShares Equity may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with JPMorgan BetaBuilders and IShares Equity

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

The idea behind JPMorgan BetaBuilders International and iShares Equity Factor 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.