Correlation Between JPMorgan BetaBuilders and IShares Residential

Can any of the company-specific risk be diversified away by investing in both JPMorgan BetaBuilders and IShares Residential 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 Residential 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 Residential and, you can compare the effects of market volatilities on JPMorgan BetaBuilders and IShares Residential 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 Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan BetaBuilders and IShares Residential.

Diversification Opportunities for JPMorgan BetaBuilders and IShares Residential

0.89

Correlation Coefficient

JPMorgan BetaBuilders  IShares Residential

Very poor diversification

The 3 months correlation between JPMorgan and IShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan BetaBuilders Internat and iShares Residential and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Residential and 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 Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Residential and has no effect on the direction of JPMorgan BetaBuilders i.e., JPMorgan BetaBuilders and IShares Residential go up and down completely randomly.

Pair Corralation between JPMorgan BetaBuilders and IShares Residential

Given the investment horizon of 90 days JPMorgan BetaBuilders International is expected to generate 0.8 times more return on investment than IShares Residential. However, JPMorgan BetaBuilders International is 1.26 times less risky than IShares Residential. It trades about 0.17 of its potential returns per unit of risk. iShares Residential and is currently generating about 0.11 per unit of risk. If you would invest  5,688  in JPMorgan BetaBuilders International on December 29, 2024 and sell it today you would earn a total of  527.00  from holding JPMorgan BetaBuilders International or generate 9.27% return on investment over 90 days.

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

JPMorgan BetaBuilders Internat  vs.  iShares Residential and

JPMorgan BetaBuilders

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan BetaBuilders International are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward indicators, JPMorgan BetaBuilders may actually be approaching a critical reversion point that can send shares even higher in April 2025.

iShares Residential and

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Residential and are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, IShares Residential may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with JPMorgan BetaBuilders and IShares Residential

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

The idea behind JPMorgan BetaBuilders International and iShares Residential and 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.