Correlation Between IShares Core and JPMorgan Emerging

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

By analyzing existing cross correlation between iShares Core MSCI and JPMorgan Emerging Markets, you can compare the effects of market volatilities on IShares Core and JPMorgan Emerging 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 Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and JPMorgan Emerging.

Diversification Opportunities for IShares Core and JPMorgan Emerging

0.99

Correlation Coefficient

IShares Core  JPMorgan Emerging

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 MSCI and JPMorgan Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Emerging Markets 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 MSCI are associated (or correlated) with JPMorgan Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Emerging Markets has no effect on the direction of IShares Core i.e., IShares Core and JPMorgan Emerging go up and down completely randomly.

Pair Corralation between IShares Core and JPMorgan Emerging

Given the investment horizon of 90 days IShares Core is expected to generate 1.14 times less return on investment than JPMorgan Emerging. But when comparing it to its historical volatility, iShares Core MSCI is 1.1 times less risky than JPMorgan Emerging. It trades about 0.03 of its potential returns per unit of risk. JPMorgan Emerging Markets is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,788  in JPMorgan Emerging Markets on September 3, 2024 and sell it today you would earn a total of  77.00  from holding JPMorgan Emerging Markets or generate 2.03% return on investment over 90 days.

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

iShares Core MSCI  vs.  JPMorgan Emerging Markets

iShares Core MSCI

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core MSCI are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, IShares Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

JPMorgan Emerging Markets

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Emerging Markets are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, JPMorgan Emerging is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares Core and JPMorgan Emerging

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

The idea behind iShares Core MSCI and JPMorgan Emerging Markets 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.