Correlation Between KBND and IShares JP

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

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

Diversification Opportunities for KBND and IShares JP

0.0

Correlation Coefficient

KBND  IShares JP

Pay attention - limited upside

The 3 months correlation between KBND and IShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding KBND and iShares JP Morgan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares JP Morgan and KBND 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 KBND are associated (or correlated) with IShares JP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares JP Morgan has no effect on the direction of KBND i.e., KBND and IShares JP go up and down completely randomly.

Pair Corralation between KBND and IShares JP

If you would invest  3,620  in iShares JP Morgan on December 28, 2024 and sell it today you would earn a total of  115.50  from holding iShares JP Morgan or generate 3.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

KBND  vs.  iShares JP Morgan

KBND

Risk-Adjusted Performance

Very Weak

Over the last 90 days KBND has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, KBND is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

iShares JP Morgan

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares JP Morgan are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, IShares JP is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KBND and IShares JP

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

The idea behind KBND and iShares JP Morgan 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.