Correlation Between JP Morgan and IShares Global

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

By analyzing existing cross correlation between JP Morgan Exchange Traded and iShares Global Infrastructure, you can compare the effects of market volatilities on JP Morgan and IShares Global 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 JP Morgan with a short position of IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of JP Morgan and IShares Global.

Diversification Opportunities for JP Morgan and IShares Global

0.05

Correlation Coefficient

JP Morgan  IShares Global

Significant diversification

The 3 months correlation between BLLD and IShares is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding JP Morgan Exchange Traded and iShares Global Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Infra and JP Morgan 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 JP Morgan Exchange Traded are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Infra has no effect on the direction of JP Morgan i.e., JP Morgan and IShares Global go up and down completely randomly.

Pair Corralation between JP Morgan and IShares Global

Given the investment horizon of 90 days JP Morgan Exchange Traded is expected to under-perform the IShares Global. In addition to that, JP Morgan is 1.03 times more volatile than iShares Global Infrastructure. It trades about -0.19 of its total potential returns per unit of risk. iShares Global Infrastructure is currently generating about -0.01 per unit of volatility. If you would invest  5,378  in iShares Global Infrastructure on September 16, 2024 and sell it today you would lose (27.00) from holding iShares Global Infrastructure or give up 0.5% of portfolio value over 90 days.

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

JP Morgan Exchange Traded  vs.  iShares Global Infrastructure

JP Morgan Exchange

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JP Morgan Exchange Traded has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

iShares Global Infra

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Global Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, IShares Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with JP Morgan and IShares Global

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

The idea behind JP Morgan Exchange Traded and iShares Global Infrastructure 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.