Correlation Between JPMorgan Inflation and IShares ETF
Can any of the company-specific risk be diversified away by investing in both JPMorgan Inflation and IShares ETF 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 JPMorgan Inflation and IShares ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JPMorgan Inflation Managed and iShares ETF Trust, you can compare the effects of market volatilities on JPMorgan Inflation and IShares ETF 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 JPMorgan Inflation with a short position of IShares ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Inflation and IShares ETF.
Diversification Opportunities for JPMorgan Inflation and IShares ETF
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between JPMorgan and IShares is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Inflation Managed and iShares ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ETF Trust and JPMorgan Inflation 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 JPMorgan Inflation Managed are associated (or correlated) with IShares ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ETF Trust has no effect on the direction of JPMorgan Inflation i.e., JPMorgan Inflation and IShares ETF go up and down completely randomly.
Pair Corralation between JPMorgan Inflation and IShares ETF
Given the investment horizon of 90 days JPMorgan Inflation is expected to generate 2.83 times less return on investment than IShares ETF. But when comparing it to its historical volatility, JPMorgan Inflation Managed is 1.3 times less risky than IShares ETF. It trades about 0.04 of its potential returns per unit of risk. iShares ETF Trust is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,452 in iShares ETF Trust on August 29, 2024 and sell it today you would earn a total of 12.00 from holding iShares ETF Trust or generate 0.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan Inflation Managed vs. iShares ETF Trust
Performance |
| Timeline |
| JPMorgan Inflation |
| iShares ETF Trust |
JPMorgan Inflation and IShares ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Inflation and IShares ETF
The main advantage of trading using opposite JPMorgan Inflation and IShares ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Inflation position performs unexpectedly, IShares ETF 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 ETF will offset losses from the drop in IShares ETF's long position.| JPMorgan Inflation vs. PIMCO 1 5 Year | JPMorgan Inflation vs. PIMCO 15 Year | JPMorgan Inflation vs. SPDR Bloomberg 1 10 | JPMorgan Inflation vs. FlexShares iBoxx 3 Year |
| IShares ETF vs. PIMCO 1 5 Year | IShares ETF vs. PIMCO 15 Year | IShares ETF vs. SPDR Bloomberg 1 10 | IShares ETF vs. FlexShares iBoxx 3 Year |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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