Correlation Between IShares Russell and JP Morgan
Can any of the company-specific risk be diversified away by investing in both IShares Russell 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 Russell 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 Russell 1000 and JP Morgan Exchange Traded, you can compare the effects of market volatilities on IShares Russell 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 Russell with a short position of JP Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and JP Morgan.
Diversification Opportunities for IShares Russell and JP Morgan
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and JCTR is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell 1000 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 Russell 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 Russell 1000 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 Russell i.e., IShares Russell and JP Morgan go up and down completely randomly.
Pair Corralation between IShares Russell and JP Morgan
Considering the 90-day investment horizon IShares Russell is expected to generate 1.05 times less return on investment than JP Morgan. But when comparing it to its historical volatility, iShares Russell 1000 is 1.0 times less risky than JP Morgan. It trades about 0.19 of its potential returns per unit of risk. JP Morgan Exchange Traded is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 7,814 in JP Morgan Exchange Traded on August 26, 2024 and sell it today you would earn a total of 297.00 from holding JP Morgan Exchange Traded or generate 3.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Russell 1000 vs. JP Morgan Exchange Traded
Performance |
| Timeline |
| iShares Russell 1000 |
| JP Morgan Exchange |
IShares Russell and JP Morgan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Russell and JP Morgan
The main advantage of trading using opposite IShares Russell and JP Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Russell 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.| IShares Russell vs. iShares Russell 3000 | IShares Russell vs. iShares Russell Mid Cap | IShares Russell vs. iShares Russell 1000 | IShares Russell vs. iShares Russell 2000 |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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