Correlation Between BlackRock Intermediate and JPMorgan Core

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

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

Diversification Opportunities for BlackRock Intermediate and JPMorgan Core

0.87

Correlation Coefficient

BlackRock Intermediate  JPMorgan Core

Very poor diversification

The 3 months correlation between BlackRock and JPMorgan is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Intermediate Muni 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 BlackRock Intermediate 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 BlackRock Intermediate Muni 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 BlackRock Intermediate i.e., BlackRock Intermediate and JPMorgan Core go up and down completely randomly.

Pair Corralation between BlackRock Intermediate and JPMorgan Core

Given the investment horizon of 90 days BlackRock Intermediate is expected to generate 5.06 times less return on investment than JPMorgan Core. But when comparing it to its historical volatility, BlackRock Intermediate Muni is 1.4 times less risky than JPMorgan Core. It trades about 0.04 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 30, 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	Strong
Accuracy	100.0%
Values	Daily Returns

BlackRock Intermediate Muni  vs.  JPMorgan Core Plus

BlackRock Intermediate

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Intermediate Muni are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, BlackRock Intermediate is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private 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 11 (%) 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 BlackRock Intermediate and JPMorgan Core

The main advantage of trading using opposite BlackRock Intermediate and JPMorgan Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock Intermediate 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 BlackRock Intermediate Muni 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.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.