Correlation Between IShares International and JPMorgan International
Can any of the company-specific risk be diversified away by investing in both IShares International and JPMorgan International 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 International and JPMorgan International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares International High and JPMorgan International Bond, you can compare the effects of market volatilities on IShares International and JPMorgan International 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 International with a short position of JPMorgan International. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares International and JPMorgan International.
Diversification Opportunities for IShares International and JPMorgan International
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and JPMorgan is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding iShares International High and JPMorgan International Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan International and IShares International 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 International High are associated (or correlated) with JPMorgan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan International has no effect on the direction of IShares International i.e., IShares International and JPMorgan International go up and down completely randomly.
Pair Corralation between IShares International and JPMorgan International
Given the investment horizon of 90 days iShares International High is expected to under-perform the JPMorgan International. In addition to that, IShares International is 3.16 times more volatile than JPMorgan International Bond. It trades about -0.34 of its total potential returns per unit of risk. JPMorgan International Bond is currently generating about -0.03 per unit of volatility. If you would invest 4,776 in JPMorgan International Bond on August 27, 2024 and sell it today you would lose (4.00) from holding JPMorgan International Bond or give up 0.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares International High vs. JPMorgan International Bond
Performance |
| Timeline |
| iShares International |
| JPMorgan International |
IShares International and JPMorgan International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares International and JPMorgan International
The main advantage of trading using opposite IShares International and JPMorgan International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares International position performs unexpectedly, JPMorgan International 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 International will offset losses from the drop in JPMorgan International's long position.| IShares International vs. iShares Intl High | IShares International vs. iShares JP Morgan | IShares International vs. VanEck International High | IShares International vs. iShares JP Morgan |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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