Correlation Between ClearShares Ultra and JPMorgan BetaBuilders

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

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

Diversification Opportunities for ClearShares Ultra and JPMorgan BetaBuilders

0.9

Correlation Coefficient

ClearShares Ultra  JPMorgan BetaBuilders

Almost no diversification

The 3 months correlation between ClearShares and JPMorgan is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding ClearShares Ultra Short Maturi and JPMorgan BetaBuilders Aggregat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan BetaBuilders and ClearShares 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 ClearShares Ultra Short Maturity are associated (or correlated) with JPMorgan BetaBuilders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan BetaBuilders has no effect on the direction of ClearShares Ultra i.e., ClearShares Ultra and JPMorgan BetaBuilders go up and down completely randomly.

Pair Corralation between ClearShares Ultra and JPMorgan BetaBuilders

Given the investment horizon of 90 days ClearShares Ultra is expected to generate 2.23 times less return on investment than JPMorgan BetaBuilders. But when comparing it to its historical volatility, ClearShares Ultra Short Maturity is 17.17 times less risky than JPMorgan BetaBuilders. It trades about 1.01 of its potential returns per unit of risk. JPMorgan BetaBuilders Aggregate is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  4,493  in JPMorgan BetaBuilders Aggregate on December 30, 2024 and sell it today you would earn a total of  109.00  from holding JPMorgan BetaBuilders Aggregate or generate 2.43% return on investment over 90 days.

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

ClearShares Ultra Short Maturi  vs.  JPMorgan BetaBuilders Aggregat

ClearShares Ultra Short

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in ClearShares Ultra Short Maturity are ranked lower than 79 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, ClearShares Ultra is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

JPMorgan BetaBuilders

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan BetaBuilders Aggregate are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, JPMorgan BetaBuilders is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ClearShares Ultra and JPMorgan BetaBuilders

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

The idea behind ClearShares Ultra Short Maturity and JPMorgan BetaBuilders Aggregate 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.