Correlation Between IShares Core and JPMorgan ETFs

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

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

Diversification Opportunities for IShares Core and JPMorgan ETFs

0.99

Correlation Coefficient

IShares Core  JPMorgan ETFs

No risk reduction

The 3 months correlation between IShares and JPMorgan is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and JPMorgan ETFs ICAV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan ETFs ICAV and IShares Core 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 Core SP are associated (or correlated) with JPMorgan ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan ETFs ICAV has no effect on the direction of IShares Core i.e., IShares Core and JPMorgan ETFs go up and down completely randomly.

Pair Corralation between IShares Core and JPMorgan ETFs

Assuming the 90 days trading horizon iShares Core SP is expected to under-perform the JPMorgan ETFs. In addition to that, IShares Core is 1.1 times more volatile than JPMorgan ETFs ICAV. It trades about -0.17 of its total potential returns per unit of risk. JPMorgan ETFs ICAV is currently generating about -0.11 per unit of volatility. If you would invest  4,873  in JPMorgan ETFs ICAV on December 21, 2024 and sell it today you would lose (265.00) from holding JPMorgan ETFs ICAV or give up 5.44% of portfolio value over 90 days.

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

iShares Core SP  vs.  JPMorgan ETFs ICAV

iShares Core SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Core SP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

JPMorgan ETFs ICAV

Risk-Adjusted Performance

Very Weak

Over the last 90 days JPMorgan ETFs ICAV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, JPMorgan ETFs is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IShares Core and JPMorgan ETFs

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

The idea behind iShares Core SP and JPMorgan ETFs ICAV 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.