Correlation Between IShares China and JPMorgan Equity
Can any of the company-specific risk be diversified away by investing in both IShares China and JPMorgan Equity 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 China and JPMorgan Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares China LargeCap and JPMorgan Equity Premium, you can compare the effects of market volatilities on IShares China and JPMorgan Equity 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 China with a short position of JPMorgan Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares China and JPMorgan Equity.
Diversification Opportunities for IShares China and JPMorgan Equity
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and JPMorgan is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding iShares China LargeCap and JPMorgan Equity Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Equity Premium and IShares China 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 China LargeCap are associated (or correlated) with JPMorgan Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Equity Premium has no effect on the direction of IShares China i.e., IShares China and JPMorgan Equity go up and down completely randomly.
Pair Corralation between IShares China and JPMorgan Equity
Assuming the 90 days trading horizon iShares China LargeCap is expected to generate 2.09 times more return on investment than JPMorgan Equity. However, IShares China is 2.09 times more volatile than JPMorgan Equity Premium. It trades about 0.11 of its potential returns per unit of risk. JPMorgan Equity Premium is currently generating about 0.09 per unit of risk. If you would invest 3,931 in iShares China LargeCap on November 28, 2024 and sell it today you would earn a total of 1,630 from holding iShares China LargeCap or generate 41.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.47% |
| Values | Daily Returns |
iShares China LargeCap vs. JPMorgan Equity Premium
Performance |
| Timeline |
| iShares China LargeCap |
| JPMorgan Equity Premium |
IShares China and JPMorgan Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares China and JPMorgan Equity
The main advantage of trading using opposite IShares China and JPMorgan Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares China position performs unexpectedly, JPMorgan Equity 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 Equity will offset losses from the drop in JPMorgan Equity's long position.| IShares China vs. iShares MSCI Emerging | IShares China vs. iShares Global Aggregate | IShares China vs. iShares CoreSP MidCap | IShares China vs. iShares SP 500 |
| JPMorgan Equity vs. JPMorgan Equity Premium | JPMorgan Equity vs. JPMorgan Global Research | JPMorgan Equity vs. JPMorgan 100Q Equity | JPMorgan Equity vs. JPMorgan Global Select |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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