Correlation Between IShares Infrastructure and JP Morgan
Can any of the company-specific risk be diversified away by investing in both IShares Infrastructure and JP Morgan 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 Infrastructure and JP Morgan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Infrastructure ETF and JP Morgan Exchange Traded, you can compare the effects of market volatilities on IShares Infrastructure and JP Morgan 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 Infrastructure with a short position of JP Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Infrastructure and JP Morgan.
Diversification Opportunities for IShares Infrastructure and JP Morgan
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IShares and BLLD is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding iShares Infrastructure ETF and JP Morgan Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JP Morgan Exchange and IShares Infrastructure 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 Infrastructure ETF are associated (or correlated) with JP Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JP Morgan Exchange has no effect on the direction of IShares Infrastructure i.e., IShares Infrastructure and JP Morgan go up and down completely randomly.
Pair Corralation between IShares Infrastructure and JP Morgan
Given the investment horizon of 90 days iShares Infrastructure ETF is expected to generate 1.31 times more return on investment than JP Morgan. However, IShares Infrastructure is 1.31 times more volatile than JP Morgan Exchange Traded. It trades about 0.28 of its potential returns per unit of risk. JP Morgan Exchange Traded is currently generating about -0.1 per unit of risk. If you would invest 4,759 in iShares Infrastructure ETF on August 29, 2024 and sell it today you would earn a total of 389.00 from holding iShares Infrastructure ETF or generate 8.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Infrastructure ETF vs. JP Morgan Exchange Traded
Performance |
| Timeline |
| iShares Infrastructure |
| JP Morgan Exchange |
IShares Infrastructure and JP Morgan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Infrastructure and JP Morgan
The main advantage of trading using opposite IShares Infrastructure and JP Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Infrastructure position performs unexpectedly, JP Morgan 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 JP Morgan will offset losses from the drop in JP Morgan's long position.The idea behind iShares Infrastructure ETF and JP Morgan Exchange Traded 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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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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