Correlation Between JPMorgan Emerging and IShares Equity

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

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

Diversification Opportunities for JPMorgan Emerging and IShares Equity

-0.01

Correlation Coefficient

JPMorgan Emerging  IShares Equity

Good diversification

The 3 months correlation between JPMorgan and IShares is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Emerging Markets and iShares Equity Factor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Equity Factor and JPMorgan Emerging 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 Emerging Markets are associated (or correlated) with IShares Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Equity Factor has no effect on the direction of JPMorgan Emerging i.e., JPMorgan Emerging and IShares Equity go up and down completely randomly.

Pair Corralation between JPMorgan Emerging and IShares Equity

Given the investment horizon of 90 days JPMorgan Emerging Markets is expected to generate 1.01 times more return on investment than IShares Equity. However, JPMorgan Emerging is 1.01 times more volatile than iShares Equity Factor. It trades about 0.04 of its potential returns per unit of risk. iShares Equity Factor is currently generating about -0.07 per unit of risk. If you would invest  3,753  in JPMorgan Emerging Markets on December 30, 2024 and sell it today you would earn a total of  91.00  from holding JPMorgan Emerging Markets or generate 2.42% return on investment over 90 days.

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

JPMorgan Emerging Markets  vs.  iShares Equity Factor

JPMorgan Emerging Markets

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Emerging Markets are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, JPMorgan Emerging is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

iShares Equity Factor

Risk-Adjusted Performance

Very Weak

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

Pair Trading with JPMorgan Emerging and IShares Equity

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

The idea behind JPMorgan Emerging Markets and iShares Equity Factor 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..