Correlation Between JPMorgan Ultra and IShares Short

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

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

Diversification Opportunities for JPMorgan Ultra and IShares Short

0.96

Correlation Coefficient

JPMorgan Ultra  IShares Short

Almost no diversification

The 3 months correlation between JPMorgan and IShares is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Ultra Short Municipal and iShares Short Maturity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Short Maturity and JPMorgan Ultra 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 Ultra Short Municipal are associated (or correlated) with IShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Short Maturity has no effect on the direction of JPMorgan Ultra i.e., JPMorgan Ultra and IShares Short go up and down completely randomly.

Pair Corralation between JPMorgan Ultra and IShares Short

Given the investment horizon of 90 days JPMorgan Ultra Short Municipal is expected to generate 0.68 times more return on investment than IShares Short. However, JPMorgan Ultra Short Municipal is 1.48 times less risky than IShares Short. It trades about 0.27 of its potential returns per unit of risk. iShares Short Maturity is currently generating about 0.17 per unit of risk. If you would invest  5,052  in JPMorgan Ultra Short Municipal on August 30, 2024 and sell it today you would earn a total of  37.00  from holding JPMorgan Ultra Short Municipal or generate 0.73% return on investment over 90 days.

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

JPMorgan Ultra Short Municipal  vs.  iShares Short Maturity

JPMorgan Ultra Short

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Ultra Short Municipal are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, JPMorgan Ultra is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

iShares Short Maturity

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Short Maturity are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, IShares Short is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with JPMorgan Ultra and IShares Short

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

The idea behind JPMorgan Ultra Short Municipal and iShares Short Maturity 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.