Correlation Between IShares Infrastructure and JP Morgan

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

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

Diversification Opportunities for IShares Infrastructure and JP Morgan

-0.46

Correlation Coefficient

IShares Infrastructure  JP Morgan

Very good diversification

The 3 months correlation between IShares and BLLD is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding iShares Infrastructure ETF and JP Morgan Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JP Morgan Exchange and IShares Infrastructure 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 Infrastructure ETF are associated (or correlated) with JP Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JP Morgan Exchange has no effect on the direction of IShares Infrastructure i.e., IShares Infrastructure and JP Morgan go up and down completely randomly.

Pair Corralation between IShares Infrastructure and JP Morgan

Given the investment horizon of 90 days iShares Infrastructure ETF is expected to under-perform the JP Morgan. In addition to that, IShares Infrastructure is 1.26 times more volatile than JP Morgan Exchange Traded. It trades about -0.02 of its total potential returns per unit of risk. JP Morgan Exchange Traded is currently generating about 0.1 per unit of volatility. If you would invest  4,643  in JP Morgan Exchange Traded on December 28, 2024 and sell it today you would earn a total of  234.00  from holding JP Morgan Exchange Traded or generate 5.04% return on investment over 90 days.

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

iShares Infrastructure ETF  vs.  JP Morgan Exchange Traded

iShares Infrastructure

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Infrastructure ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, IShares Infrastructure is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

JP Morgan Exchange

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JP Morgan Exchange Traded are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, JP Morgan is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares Infrastructure and JP Morgan

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

The idea behind iShares Infrastructure ETF and JP Morgan Exchange Traded 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.