Correlation Between IShares MSCI and JPMorgan Global
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and JPMorgan Global 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 MSCI and JPMorgan Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI Global and JPMorgan Global Select, you can compare the effects of market volatilities on IShares MSCI and JPMorgan Global 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 MSCI with a short position of JPMorgan Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and JPMorgan Global.
Diversification Opportunities for IShares MSCI and JPMorgan Global
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and JPMorgan is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Global and JPMorgan Global Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Global Select and IShares MSCI 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 MSCI Global are associated (or correlated) with JPMorgan Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Global Select has no effect on the direction of IShares MSCI i.e., IShares MSCI and JPMorgan Global go up and down completely randomly.
Pair Corralation between IShares MSCI and JPMorgan Global
Given the investment horizon of 90 days IShares MSCI is expected to generate 1.42 times less return on investment than JPMorgan Global. But when comparing it to its historical volatility, iShares MSCI Global is 1.57 times less risky than JPMorgan Global. It trades about 0.16 of its potential returns per unit of risk. JPMorgan Global Select is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4,775 in JPMorgan Global Select on September 1, 2024 and sell it today you would earn a total of 1,579 from holding JPMorgan Global Select or generate 33.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
iShares MSCI Global vs. JPMorgan Global Select
Performance |
| Timeline |
| iShares MSCI Global |
| JPMorgan Global Select |
IShares MSCI and JPMorgan Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and JPMorgan Global
The main advantage of trading using opposite IShares MSCI and JPMorgan Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, JPMorgan Global 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 Global will offset losses from the drop in JPMorgan Global's long position.| IShares MSCI vs. iShares MSCI Emerging | IShares MSCI vs. BMO Long Federal | IShares MSCI vs. iShares MSCI EAFE | IShares MSCI vs. Vanguard Total Market |
| JPMorgan Global vs. FT Vest Equity | JPMorgan Global vs. Northern Lights | JPMorgan Global vs. Dimensional International High | JPMorgan Global vs. Matthews China Discovery |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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