Correlation Between IShares Real and JPMorgan Realty

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

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

Diversification Opportunities for IShares Real and JPMorgan Realty

0.97

Correlation Coefficient

IShares Real  JPMorgan Realty

Almost no diversification

The 3 months correlation between IShares and JPMorgan is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares Real Estate and JPMorgan Realty Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Realty Income and IShares Real 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 Real Estate are associated (or correlated) with JPMorgan Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Realty Income has no effect on the direction of IShares Real i.e., IShares Real and JPMorgan Realty go up and down completely randomly.

Pair Corralation between IShares Real and JPMorgan Realty

Considering the 90-day investment horizon iShares Real Estate is expected to generate 1.01 times more return on investment than JPMorgan Realty. However, IShares Real is 1.01 times more volatile than JPMorgan Realty Income. It trades about 0.05 of its potential returns per unit of risk. JPMorgan Realty Income is currently generating about 0.04 per unit of risk. If you would invest  9,194  in iShares Real Estate on December 29, 2024 and sell it today you would earn a total of  280.00  from holding iShares Real Estate or generate 3.05% return on investment over 90 days.

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

iShares Real Estate  vs.  JPMorgan Realty Income

iShares Real Estate

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Real Estate are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, IShares Real is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

JPMorgan Realty Income

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Realty Income are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, JPMorgan Realty is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares Real and JPMorgan Realty

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

The idea behind iShares Real Estate and JPMorgan Realty Income 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.