Correlation Between IShares Core and JPMorgan Active

Can any of the company-specific risk be diversified away by investing in both IShares Core and JPMorgan Active 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 JPMorgan Active 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 JPMorgan Active Value, you can compare the effects of market volatilities on IShares Core and JPMorgan Active 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 JPMorgan Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and JPMorgan Active.

Diversification Opportunities for IShares Core and JPMorgan Active

0.84

Correlation Coefficient

IShares Core  JPMorgan Active

Very poor diversification

The 3 months correlation between IShares and JPMorgan is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and JPMorgan Active Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Active Value 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 JPMorgan Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Active Value has no effect on the direction of IShares Core i.e., IShares Core and JPMorgan Active go up and down completely randomly.

Pair Corralation between IShares Core and JPMorgan Active

Given the investment horizon of 90 days iShares Core SP is expected to generate 0.89 times more return on investment than JPMorgan Active. However, iShares Core SP is 1.12 times less risky than JPMorgan Active. It trades about 0.02 of its potential returns per unit of risk. JPMorgan Active Value is currently generating about 0.0 per unit of risk. If you would invest  9,214  in iShares Core SP on December 29, 2024 and sell it today you would earn a total of  67.00  from holding iShares Core SP or generate 0.73% return on investment over 90 days.

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

iShares Core SP  vs.  JPMorgan Active Value

iShares Core SP

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, IShares Core is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

JPMorgan Active Value

Risk-Adjusted Performance

Very Weak

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

Pair Trading with IShares Core and JPMorgan Active

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

The idea behind iShares Core SP and JPMorgan Active 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.