Correlation Between IShares ESG and JPMorgan BetaBuilders

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

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

Diversification Opportunities for IShares ESG and JPMorgan BetaBuilders

0.9

Correlation Coefficient

IShares ESG  JPMorgan BetaBuilders

Almost no diversification

The 3 months correlation between IShares and JPMorgan is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aggregate and JPMorgan BetaBuilders Internat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan BetaBuilders and IShares ESG 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 iShares ESG Aggregate are associated (or correlated) with JPMorgan BetaBuilders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan BetaBuilders has no effect on the direction of IShares ESG i.e., IShares ESG and JPMorgan BetaBuilders go up and down completely randomly.

Pair Corralation between IShares ESG and JPMorgan BetaBuilders

Given the investment horizon of 90 days IShares ESG is expected to generate 3.66 times less return on investment than JPMorgan BetaBuilders. But when comparing it to its historical volatility, iShares ESG Aggregate is 2.91 times less risky than JPMorgan BetaBuilders. It trades about 0.13 of its potential returns per unit of risk. JPMorgan BetaBuilders International is currently generating about 0.17 of returns per unit of risk over similar time horizon. 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	Very Strong
Accuracy	100.0%
Values	Daily Returns

iShares ESG Aggregate  vs.  JPMorgan BetaBuilders Internat

iShares ESG Aggregate

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares ESG Aggregate are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, IShares ESG is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with IShares ESG and JPMorgan BetaBuilders

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

The idea behind iShares ESG Aggregate and JPMorgan BetaBuilders International 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 Commodity Directory module to find actively traded commodities issued by global exchanges.