Correlation Between Xtrackers and JPMorgan ETFs

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

By analyzing existing cross correlation between Xtrackers II and JPMorgan ETFs ICAV, you can compare the effects of market volatilities on Xtrackers and JPMorgan ETFs 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 Xtrackers with a short position of JPMorgan ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers and JPMorgan ETFs.

Diversification Opportunities for Xtrackers and JPMorgan ETFs

0.57

Correlation Coefficient

Xtrackers  JPMorgan ETFs

Very weak diversification

The 3 months correlation between Xtrackers and JPMorgan is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers II and JPMorgan ETFs ICAV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan ETFs ICAV and Xtrackers 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 Xtrackers II are associated (or correlated) with JPMorgan ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan ETFs ICAV has no effect on the direction of Xtrackers i.e., Xtrackers and JPMorgan ETFs go up and down completely randomly.

Pair Corralation between Xtrackers and JPMorgan ETFs

Assuming the 90 days trading horizon Xtrackers II is expected to under-perform the JPMorgan ETFs. In addition to that, Xtrackers is 1.2 times more volatile than JPMorgan ETFs ICAV. It trades about -0.08 of its total potential returns per unit of risk. JPMorgan ETFs ICAV is currently generating about -0.08 per unit of volatility. If you would invest  4,328  in JPMorgan ETFs ICAV on September 30, 2024 and sell it today you would lose (160.00) from holding JPMorgan ETFs ICAV or give up 3.7% of portfolio value over 90 days.

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

Xtrackers II   vs.  JPMorgan ETFs ICAV

Xtrackers II

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtrackers II has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Xtrackers is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

JPMorgan ETFs ICAV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMorgan ETFs ICAV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, JPMorgan ETFs is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Xtrackers and JPMorgan ETFs

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

The idea behind Xtrackers II and JPMorgan ETFs ICAV 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.

Check out your portfolio center.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.