Correlation Between IShares JPX and IShares Govt

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

By analyzing existing cross correlation between IShares JPX Nikkei 400 and iShares Govt Bond, you can compare the effects of market volatilities on IShares JPX and IShares Govt 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 JPX with a short position of IShares Govt. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares JPX and IShares Govt.

Diversification Opportunities for IShares JPX and IShares Govt

0.0

Correlation Coefficient

IShares JPX  IShares Govt

Pay attention - limited upside

The 3 months correlation between IShares and IShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding IShares JPX Nikkei 400 and iShares Govt Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Govt Bond and IShares JPX 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 JPX Nikkei 400 are associated (or correlated) with IShares Govt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Govt Bond has no effect on the direction of IShares JPX i.e., IShares JPX and IShares Govt go up and down completely randomly.

Pair Corralation between IShares JPX and IShares Govt

If you would invest  15,303  in iShares Govt Bond on September 4, 2024 and sell it today you would earn a total of  441.00  from holding iShares Govt Bond or generate 2.88% return on investment over 90 days.

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

IShares JPX Nikkei 400  vs.  iShares Govt Bond

IShares JPX Nikkei

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IShares JPX Nikkei 400 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, IShares JPX is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

iShares Govt Bond

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Govt Bond are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, IShares Govt is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares JPX and IShares Govt

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

The idea behind IShares JPX Nikkei 400 and iShares Govt Bond 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..