Correlation Between IShares MSCI and JPMorgan Diversified

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

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

Diversification Opportunities for IShares MSCI and JPMorgan Diversified

0.7

Correlation Coefficient

IShares MSCI  JPMorgan Diversified

Poor diversification

The 3 months correlation between IShares and JPMorgan is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Emerging and JPMorgan Diversified Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Diversified and IShares MSCI 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 MSCI Emerging are associated (or correlated) with JPMorgan Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Diversified has no effect on the direction of IShares MSCI i.e., IShares MSCI and JPMorgan Diversified go up and down completely randomly.

Pair Corralation between IShares MSCI and JPMorgan Diversified

Given the investment horizon of 90 days iShares MSCI Emerging is expected to under-perform the JPMorgan Diversified. But the etf apears to be less risky and, when comparing its historical volatility, iShares MSCI Emerging is 1.08 times less risky than JPMorgan Diversified. The etf trades about -0.07 of its potential returns per unit of risk. The JPMorgan Diversified Return is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  5,398  in JPMorgan Diversified Return on September 12, 2024 and sell it today you would earn a total of  63.00  from holding JPMorgan Diversified Return or generate 1.17% return on investment over 90 days.

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

iShares MSCI Emerging  vs.  JPMorgan Diversified Return

iShares MSCI Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares MSCI Emerging has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, IShares MSCI is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

JPMorgan Diversified

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Diversified Return are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, JPMorgan Diversified is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares MSCI and JPMorgan Diversified

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

The idea behind iShares MSCI Emerging and JPMorgan Diversified Return 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.