Correlation Between IShares Core and JPMorgan Short

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

By analyzing existing cross correlation between iShares Core 1 5 and JPMorgan Short Duration, you can compare the effects of market volatilities on IShares Core and JPMorgan Short 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 Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and JPMorgan Short.

Diversification Opportunities for IShares Core and JPMorgan Short

0.98

Correlation Coefficient

IShares Core  JPMorgan Short

Almost no diversification

The 3 months correlation between IShares and JPMorgan is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core 1 5 and JPMorgan Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Short Duration 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 1 5 are associated (or correlated) with JPMorgan Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Short Duration has no effect on the direction of IShares Core i.e., IShares Core and JPMorgan Short go up and down completely randomly.

Pair Corralation between IShares Core and JPMorgan Short

Given the investment horizon of 90 days IShares Core is expected to generate 1.23 times less return on investment than JPMorgan Short. But when comparing it to its historical volatility, iShares Core 1 5 is 1.01 times less risky than JPMorgan Short. It trades about 0.05 of its potential returns per unit of risk. JPMorgan Short Duration is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4,671  in JPMorgan Short Duration on September 2, 2024 and sell it today you would earn a total of  24.00  from holding JPMorgan Short Duration or generate 0.51% 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 1 5  vs.  JPMorgan Short Duration

iShares Core 1

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core 1 5 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares Core is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

JPMorgan Short Duration

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Short Duration are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, JPMorgan Short is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with IShares Core and JPMorgan Short

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

The idea behind iShares Core 1 5 and JPMorgan Short Duration 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.