Correlation Between IShares Cohen and JPMorgan BetaBuilders

Can any of the company-specific risk be diversified away by investing in both IShares Cohen 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 Cohen 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 Cohen Steers and JPMorgan BetaBuilders MSCI, you can compare the effects of market volatilities on IShares Cohen 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 Cohen with a short position of JPMorgan BetaBuilders. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Cohen and JPMorgan BetaBuilders.

Diversification Opportunities for IShares Cohen and JPMorgan BetaBuilders

1.0

Correlation Coefficient

IShares Cohen  JPMorgan BetaBuilders

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 Cohen Steers and JPMorgan BetaBuilders MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan BetaBuilders and IShares Cohen 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 Cohen Steers 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 Cohen i.e., IShares Cohen and JPMorgan BetaBuilders go up and down completely randomly.

Pair Corralation between IShares Cohen and JPMorgan BetaBuilders

Considering the 90-day investment horizon iShares Cohen Steers is expected to under-perform the JPMorgan BetaBuilders. In addition to that, IShares Cohen is 1.03 times more volatile than JPMorgan BetaBuilders MSCI. It trades about -0.06 of its total potential returns per unit of risk. JPMorgan BetaBuilders MSCI is currently generating about -0.06 per unit of volatility. If you would invest  10,119  in JPMorgan BetaBuilders MSCI on November 28, 2024 and sell it today you would lose (405.00) from holding JPMorgan BetaBuilders MSCI or give up 4.0% of portfolio value over 90 days.

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

iShares Cohen Steers  vs.  JPMorgan BetaBuilders MSCI

iShares Cohen Steers

Risk-Adjusted Performance

Very Weak

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

JPMorgan BetaBuilders

Risk-Adjusted Performance

Very Weak

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

Pair Trading with IShares Cohen and JPMorgan BetaBuilders

The main advantage of trading using opposite IShares Cohen and JPMorgan BetaBuilders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Cohen 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 Cohen Steers and JPMorgan BetaBuilders MSCI 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.