Correlation Between JPMorgan Equity and IShares SP
Can any of the company-specific risk be diversified away by investing in both JPMorgan Equity and IShares SP 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 Equity and IShares SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JPMorgan Equity Premium and iShares SP 500, you can compare the effects of market volatilities on JPMorgan Equity and IShares SP 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 Equity with a short position of IShares SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Equity and IShares SP.
Diversification Opportunities for JPMorgan Equity and IShares SP
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 Equity Premium and iShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP 500 and JPMorgan Equity 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 Equity Premium are associated (or correlated) with IShares SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP 500 has no effect on the direction of JPMorgan Equity i.e., JPMorgan Equity and IShares SP go up and down completely randomly.
Pair Corralation between JPMorgan Equity and IShares SP
Given the investment horizon of 90 days JPMorgan Equity is expected to generate 1.02 times less return on investment than IShares SP. But when comparing it to its historical volatility, JPMorgan Equity Premium is 1.23 times less risky than IShares SP. It trades about 0.29 of its potential returns per unit of risk. iShares SP 500 is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 4,910 in iShares SP 500 on August 30, 2024 and sell it today you would earn a total of 155.00 from holding iShares SP 500 or generate 3.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan Equity Premium vs. iShares SP 500
Performance |
| Timeline |
| JPMorgan Equity Premium |
| iShares SP 500 |
JPMorgan Equity and IShares SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Equity and IShares SP
The main advantage of trading using opposite JPMorgan Equity and IShares SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Equity position performs unexpectedly, IShares SP 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 SP will offset losses from the drop in IShares SP's long position.| JPMorgan Equity vs. Global X SP | JPMorgan Equity vs. Amplify CWP Enhanced | JPMorgan Equity vs. Global X Russell | JPMorgan Equity vs. JPMorgan Nasdaq Equity |
| IShares SP vs. Global X SP | IShares SP vs. Amplify CWP Enhanced | IShares SP vs. Global X Russell | IShares SP vs. JPMorgan Nasdaq Equity |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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