Correlation Between JPMorgan Ultra and IShares Treasury

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

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

Diversification Opportunities for JPMorgan Ultra and IShares Treasury

0.48

Correlation Coefficient

JPMorgan Ultra  IShares Treasury

Very weak diversification

The 3 months correlation between JPMorgan and IShares is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Ultra Short Income and iShares Treasury Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Treasury Floating and JPMorgan Ultra 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 Ultra Short Income are associated (or correlated) with IShares Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Treasury Floating has no effect on the direction of JPMorgan Ultra i.e., JPMorgan Ultra and IShares Treasury go up and down completely randomly.

Pair Corralation between JPMorgan Ultra and IShares Treasury

Given the investment horizon of 90 days JPMorgan Ultra Short Income is expected to generate about the same return on investment as iShares Treasury Floating. However, JPMorgan Ultra is 1.3 times more volatile than iShares Treasury Floating. It trades about 0.67 of its potential returns per unit of risk. iShares Treasury Floating is currently producing about 0.87 per unit of risk. If you would invest  5,007  in iShares Treasury Floating on November 28, 2024 and sell it today you would earn a total of  58.00  from holding iShares Treasury Floating or generate 1.16% return on investment over 90 days.

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

JPMorgan Ultra Short Income  vs.  iShares Treasury Floating

JPMorgan Ultra Short

Risk-Adjusted Performance

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Ultra Short Income are ranked lower than 52 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, JPMorgan Ultra is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

iShares Treasury Floating

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Treasury Floating are ranked lower than 68 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, IShares Treasury is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with JPMorgan Ultra and IShares Treasury

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

The idea behind JPMorgan Ultra Short Income and iShares Treasury Floating 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..