Correlation Between JPMorgan BetaBuilders and SHP ETF

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

By analyzing existing cross correlation between JPMorgan BetaBuilders Aggregate and SHP ETF Trust, you can compare the effects of market volatilities on JPMorgan BetaBuilders and SHP ETF 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 JPMorgan BetaBuilders with a short position of SHP ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan BetaBuilders and SHP ETF.

Diversification Opportunities for JPMorgan BetaBuilders and SHP ETF

0.99

Correlation Coefficient

JPMorgan BetaBuilders  SHP ETF

No risk reduction

The 3 months correlation between JPMorgan and SHP is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan BetaBuilders Aggregat and SHP ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHP ETF Trust and JPMorgan BetaBuilders 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 JPMorgan BetaBuilders Aggregate are associated (or correlated) with SHP ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHP ETF Trust has no effect on the direction of JPMorgan BetaBuilders i.e., JPMorgan BetaBuilders and SHP ETF go up and down completely randomly.

Pair Corralation between JPMorgan BetaBuilders and SHP ETF

Given the investment horizon of 90 days JPMorgan BetaBuilders is expected to generate 1.13 times less return on investment than SHP ETF. In addition to that, JPMorgan BetaBuilders is 1.08 times more volatile than SHP ETF Trust. It trades about 0.16 of its total potential returns per unit of risk. SHP ETF Trust is currently generating about 0.19 per unit of volatility. If you would invest  4,710  in SHP ETF Trust on September 5, 2024 and sell it today you would earn a total of  61.00  from holding SHP ETF Trust or generate 1.3% return on investment over 90 days.

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

JPMorgan BetaBuilders Aggregat  vs.  SHP ETF Trust

JPMorgan BetaBuilders

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMorgan BetaBuilders Aggregate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, JPMorgan BetaBuilders is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SHP ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHP ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, SHP ETF is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with JPMorgan BetaBuilders and SHP ETF

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

The idea behind JPMorgan BetaBuilders Aggregate and SHP ETF Trust 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.