Correlation Between JPMorgan BetaBuilders and IShares MSCI

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

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

Diversification Opportunities for JPMorgan BetaBuilders and IShares MSCI

0.84

Correlation Coefficient

JPMorgan BetaBuilders  IShares MSCI

Very poor diversification

The 3 months correlation between JPMorgan and IShares is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan BetaBuilders Develope and iShares MSCI All in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI All and JPMorgan BetaBuilders 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 JPMorgan BetaBuilders Developed are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI All has no effect on the direction of JPMorgan BetaBuilders i.e., JPMorgan BetaBuilders and IShares MSCI go up and down completely randomly.

Pair Corralation between JPMorgan BetaBuilders and IShares MSCI

Given the investment horizon of 90 days JPMorgan BetaBuilders is expected to generate 1.03 times less return on investment than IShares MSCI. But when comparing it to its historical volatility, JPMorgan BetaBuilders Developed is 1.3 times less risky than IShares MSCI. It trades about 0.06 of its potential returns per unit of risk. iShares MSCI All is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  7,151  in iShares MSCI All on September 2, 2024 and sell it today you would earn a total of  269.00  from holding iShares MSCI All or generate 3.76% return on investment over 90 days.

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

JPMorgan BetaBuilders Develope  vs.  iShares MSCI All

JPMorgan BetaBuilders

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan BetaBuilders Developed are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, JPMorgan BetaBuilders is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

iShares MSCI All

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI All are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady basic indicators, IShares MSCI is not utilizing all of its potentials. The recent stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with JPMorgan BetaBuilders and IShares MSCI

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

The idea behind JPMorgan BetaBuilders Developed and iShares MSCI All 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.