Correlation Between IShares Expanded and JPMorgan International

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

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

Diversification Opportunities for IShares Expanded and JPMorgan International

0.55

Correlation Coefficient

IShares Expanded  JPMorgan International

Very weak diversification

The 3 months correlation between IShares and JPMorgan is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding iShares Expanded Tech Software and JPMorgan International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan International and IShares Expanded 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 Expanded Tech Software are associated (or correlated) with JPMorgan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan International has no effect on the direction of IShares Expanded i.e., IShares Expanded and JPMorgan International go up and down completely randomly.

Pair Corralation between IShares Expanded and JPMorgan International

Considering the 90-day investment horizon IShares Expanded is expected to generate 1.54 times less return on investment than JPMorgan International. In addition to that, IShares Expanded is 2.05 times more volatile than JPMorgan International Value. It trades about 0.05 of its total potential returns per unit of risk. JPMorgan International Value is currently generating about 0.17 per unit of volatility. If you would invest  5,573  in JPMorgan International Value on November 19, 2024 and sell it today you would earn a total of  399.00  from holding JPMorgan International Value or generate 7.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

iShares Expanded Tech Software  vs.  JPMorgan International Value

iShares Expanded Tech

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Expanded Tech Software are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, IShares Expanded is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

JPMorgan International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan International Value are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, JPMorgan International may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with IShares Expanded and JPMorgan International

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

The idea behind iShares Expanded Tech Software and JPMorgan International Value 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.