Correlation Between IShares SP and Jpmorgan Active
Can any of the company-specific risk be diversified away by investing in both IShares SP and Jpmorgan Active 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 SP and Jpmorgan Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares SP Small Cap and Jpmorgan Active Small, you can compare the effects of market volatilities on IShares SP and Jpmorgan Active 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 SP with a short position of Jpmorgan Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and Jpmorgan Active.
Diversification Opportunities for IShares SP and Jpmorgan Active
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Jpmorgan is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP Small Cap and Jpmorgan Active Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Active Small and IShares SP 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 SP Small Cap are associated (or correlated) with Jpmorgan Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Active Small has no effect on the direction of IShares SP i.e., IShares SP and Jpmorgan Active go up and down completely randomly.
Pair Corralation between IShares SP and Jpmorgan Active
Considering the 90-day investment horizon iShares SP Small Cap is expected to generate 1.06 times more return on investment than Jpmorgan Active. However, IShares SP is 1.06 times more volatile than Jpmorgan Active Small. It trades about 0.23 of its potential returns per unit of risk. Jpmorgan Active Small is currently generating about 0.22 per unit of risk. If you would invest 10,757 in iShares SP Small Cap on August 29, 2024 and sell it today you would earn a total of 940.00 from holding iShares SP Small Cap or generate 8.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares SP Small Cap vs. Jpmorgan Active Small
Performance |
| Timeline |
| iShares SP Small |
| Jpmorgan Active Small |
IShares SP and Jpmorgan Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SP and Jpmorgan Active
The main advantage of trading using opposite IShares SP and Jpmorgan Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP position performs unexpectedly, Jpmorgan Active 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 Active will offset losses from the drop in Jpmorgan Active's long position.| IShares SP vs. iShares SP Small Cap | IShares SP vs. iShares SP Mid Cap | IShares SP vs. iShares SP Mid Cap | IShares SP vs. iShares SP 500 |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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