Correlation Between IShares Short and JPMorgan Ultra

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

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

Diversification Opportunities for IShares Short and JPMorgan Ultra

0.91

Correlation Coefficient

IShares Short  JPMorgan Ultra

Almost no diversification

The 3 months correlation between IShares and JPMorgan is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding iShares Short Treasury and JPMorgan Ultra Short Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Ultra Short and IShares Short 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 iShares Short Treasury are associated (or correlated) with JPMorgan Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Ultra Short has no effect on the direction of IShares Short i.e., IShares Short and JPMorgan Ultra go up and down completely randomly.

Pair Corralation between IShares Short and JPMorgan Ultra

Considering the 90-day investment horizon IShares Short is expected to generate 1.22 times less return on investment than JPMorgan Ultra. But when comparing it to its historical volatility, iShares Short Treasury is 2.59 times less risky than JPMorgan Ultra. It trades about 1.27 of its potential returns per unit of risk. JPMorgan Ultra Short Income is currently generating about 0.6 of returns per unit of risk over similar time horizon. If you would invest  5,000  in JPMorgan Ultra Short Income on December 29, 2024 and sell it today you would earn a total of  62.00  from holding JPMorgan Ultra Short Income or generate 1.24% return on investment over 90 days.

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

iShares Short Treasury  vs.  JPMorgan Ultra Short Income

iShares Short Treasury

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Short Treasury are ranked lower than 96 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical indicators, IShares Short is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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 47 (%) 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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Short and JPMorgan Ultra

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

The idea behind iShares Short Treasury and JPMorgan Ultra Short Income 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.