Correlation Between IShares Core and JP Morgan

Can any of the company-specific risk be diversified away by investing in both IShares Core 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 Core 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 Core SP and JP Morgan Exchange Traded, you can compare the effects of market volatilities on IShares Core 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 Core with a short position of JP Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and JP Morgan.

Diversification Opportunities for IShares Core and JP Morgan

-0.36

Correlation Coefficient

IShares Core  JP Morgan

Very good diversification

The 3 months correlation between IShares and JIRE is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP 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 Core 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 Core SP 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 Core i.e., IShares Core and JP Morgan go up and down completely randomly.

Pair Corralation between IShares Core and JP Morgan

Given the investment horizon of 90 days iShares Core SP is expected to under-perform the JP Morgan. In addition to that, IShares Core is 1.2 times more volatile than JP Morgan Exchange Traded. It trades about -0.06 of its total potential returns per unit of risk. JP Morgan Exchange Traded is currently generating about 0.2 per unit of volatility. If you would invest  5,846  in JP Morgan Exchange Traded on December 28, 2024 and sell it today you would earn a total of  636.00  from holding JP Morgan Exchange Traded or generate 10.88% return on investment over 90 days.

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

iShares Core SP  vs.  JP Morgan Exchange Traded

iShares Core SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Core SP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares Core is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

JP Morgan Exchange

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JP Morgan Exchange Traded are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, JP Morgan may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with IShares Core and JP Morgan

The main advantage of trading using opposite IShares Core and JP Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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 Core SP 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.