Correlation Between JP Morgan and IShares MSCI

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

By analyzing existing cross correlation between JP Morgan Exchange Traded and iShares MSCI ACWI, you can compare the effects of market volatilities on JP Morgan and IShares MSCI 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 JP Morgan with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of JP Morgan and IShares MSCI.

Diversification Opportunities for JP Morgan and IShares MSCI

0.98

Correlation Coefficient

JP Morgan  IShares MSCI

Almost no diversification

The 3 months correlation between JIRE and IShares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding JP Morgan Exchange Traded and iShares MSCI ACWI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI ACWI and JP Morgan 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 JP Morgan Exchange Traded are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI ACWI has no effect on the direction of JP Morgan i.e., JP Morgan and IShares MSCI go up and down completely randomly.

Pair Corralation between JP Morgan and IShares MSCI

Given the investment horizon of 90 days JP Morgan Exchange Traded is expected to generate 1.11 times more return on investment than IShares MSCI. However, JP Morgan is 1.11 times more volatile than iShares MSCI ACWI. It trades about 0.35 of its potential returns per unit of risk. iShares MSCI ACWI is currently generating about 0.28 per unit of risk. If you would invest  6,083  in JP Morgan Exchange Traded on December 5, 2024 and sell it today you would earn a total of  340.00  from holding JP Morgan Exchange Traded or generate 5.59% return on investment over 90 days.

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

JP Morgan Exchange Traded  vs.  iShares MSCI ACWI

JP Morgan Exchange

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JP Morgan Exchange Traded are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, JP Morgan is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

iShares MSCI ACWI

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI ACWI are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, IShares MSCI is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JP Morgan and IShares MSCI

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

The idea behind JP Morgan Exchange Traded and iShares MSCI ACWI 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.