Correlation Between IShares Trust and JPMorgan Core

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

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

Diversification Opportunities for IShares Trust and JPMorgan Core

1.0

Correlation Coefficient

IShares Trust  JPMorgan Core

No risk reduction

The 3 months correlation between IShares and JPMorgan is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and JPMorgan Core Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Core Plus and IShares Trust 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 Trust are associated (or correlated) with JPMorgan Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Core Plus has no effect on the direction of IShares Trust i.e., IShares Trust and JPMorgan Core go up and down completely randomly.

Pair Corralation between IShares Trust and JPMorgan Core

Given the investment horizon of 90 days IShares Trust is expected to generate 1.15 times less return on investment than JPMorgan Core. But when comparing it to its historical volatility, iShares Trust is 1.07 times less risky than JPMorgan Core. It trades about 0.14 of its potential returns per unit of risk. JPMorgan Core Plus is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  4,573  in JPMorgan Core Plus on December 29, 2024 and sell it today you would earn a total of  121.00  from holding JPMorgan Core Plus or generate 2.65% return on investment over 90 days.

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

iShares Trust   vs.  JPMorgan Core Plus

iShares Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares Trust is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

JPMorgan Core Plus

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Core Plus are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, JPMorgan Core 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 Trust and JPMorgan Core

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

The idea behind iShares Trust and JPMorgan Core Plus 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.