Correlation Between IShares International and IShares JP
Can any of the company-specific risk be diversified away by investing in both IShares International and IShares JP 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 IShares JP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares International Treasury and iShares JP Morgan, you can compare the effects of market volatilities on IShares International and IShares JP 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 IShares JP. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares International and IShares JP.
Diversification Opportunities for IShares International and IShares JP
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and IShares is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding iShares International Treasury and iShares JP Morgan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares JP Morgan 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 Treasury are associated (or correlated) with IShares JP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares JP Morgan has no effect on the direction of IShares International i.e., IShares International and IShares JP go up and down completely randomly.
Pair Corralation between IShares International and IShares JP
Given the investment horizon of 90 days IShares International is expected to generate 39.75 times less return on investment than IShares JP. In addition to that, IShares International is 1.31 times more volatile than iShares JP Morgan. It trades about 0.0 of its total potential returns per unit of risk. iShares JP Morgan is currently generating about 0.03 per unit of volatility. If you would invest 3,403 in iShares JP Morgan on August 30, 2024 and sell it today you would earn a total of 260.00 from holding iShares JP Morgan or generate 7.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares International Treasury vs. iShares JP Morgan
Performance |
| Timeline |
| iShares International |
| iShares JP Morgan |
IShares International and IShares JP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares International and IShares JP
The main advantage of trading using opposite IShares International and IShares JP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares International position performs unexpectedly, IShares JP 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 JP will offset losses from the drop in IShares JP's long position.The idea behind iShares International Treasury and iShares JP Morgan 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.
| IShares JP vs. Schwab Fundamental International | IShares JP vs. Xtrackers International Real | IShares JP vs. Schwab Fundamental Small | IShares JP vs. Schwab Fundamental Emerging |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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