Correlation Between IShares JP and Morgan Stanley

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

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

Diversification Opportunities for IShares JP and Morgan Stanley

0.77

Correlation Coefficient

IShares JP  Morgan Stanley

Poor diversification

The 3 months correlation between IShares and Morgan is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding iShares JP Morgan and Morgan Stanley ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley ETF and IShares JP 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 JP Morgan are associated (or correlated) with Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley ETF has no effect on the direction of IShares JP i.e., IShares JP and Morgan Stanley go up and down completely randomly.

Pair Corralation between IShares JP and Morgan Stanley

Given the investment horizon of 90 days iShares JP Morgan is expected to generate 1.89 times more return on investment than Morgan Stanley. However, IShares JP is 1.89 times more volatile than Morgan Stanley ETF. It trades about 0.17 of its potential returns per unit of risk. Morgan Stanley ETF is currently generating about 0.11 per unit of risk. If you would invest  3,765  in iShares JP Morgan on September 12, 2024 and sell it today you would earn a total of  134.00  from holding iShares JP Morgan or generate 3.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

iShares JP Morgan  vs.  Morgan Stanley ETF

iShares JP Morgan

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares JP Morgan are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, IShares JP is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Morgan Stanley ETF

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley ETF are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, Morgan Stanley is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares JP and Morgan Stanley

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

The idea behind iShares JP Morgan and Morgan Stanley ETF 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.