Correlation Between JPMorgan Equity and ISharesUBS Treasury
Can any of the company-specific risk be diversified away by investing in both JPMorgan Equity and ISharesUBS Treasury 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 ISharesUBS Treasury 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 iSharesUBS Treasury, you can compare the effects of market volatilities on JPMorgan Equity and ISharesUBS Treasury 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 ISharesUBS Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Equity and ISharesUBS Treasury.
Diversification Opportunities for JPMorgan Equity and ISharesUBS Treasury
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between JPMorgan and ISharesUBS is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Equity Premium and iSharesUBS Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iSharesUBS Treasury 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 ISharesUBS Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iSharesUBS Treasury has no effect on the direction of JPMorgan Equity i.e., JPMorgan Equity and ISharesUBS Treasury go up and down completely randomly.
Pair Corralation between JPMorgan Equity and ISharesUBS Treasury
Assuming the 90 days trading horizon JPMorgan Equity is expected to generate 1.45 times less return on investment than ISharesUBS Treasury. In addition to that, JPMorgan Equity is 2.13 times more volatile than iSharesUBS Treasury. It trades about 0.03 of its total potential returns per unit of risk. iSharesUBS Treasury is currently generating about 0.1 per unit of volatility. If you would invest 9,685 in iSharesUBS Treasury on August 30, 2024 and sell it today you would earn a total of 50.00 from holding iSharesUBS Treasury or generate 0.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan Equity Premium vs. iSharesUBS Treasury
Performance |
| Timeline |
| JPMorgan Equity Premium |
| iSharesUBS Treasury |
JPMorgan Equity and ISharesUBS Treasury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Equity and ISharesUBS Treasury
The main advantage of trading using opposite JPMorgan Equity and ISharesUBS Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Equity position performs unexpectedly, ISharesUBS Treasury 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 ISharesUBS Treasury will offset losses from the drop in ISharesUBS Treasury's long position.| JPMorgan Equity vs. Betashares Asia Technology | JPMorgan Equity vs. CD Private Equity | JPMorgan Equity vs. BetaShares Australia 200 | JPMorgan Equity vs. Australian High Interest |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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