Correlation Between JP Morgan and IShares Yield
Can any of the company-specific risk be diversified away by investing in both JP Morgan and IShares Yield 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 JP Morgan and IShares Yield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JP Morgan Exchange Traded and iShares Yield Optimized, you can compare the effects of market volatilities on JP Morgan and IShares Yield 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 JP Morgan with a short position of IShares Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of JP Morgan and IShares Yield.
Diversification Opportunities for JP Morgan and IShares Yield
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JPIE and IShares is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding JP Morgan Exchange Traded and iShares Yield Optimized in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Yield Optimized and JP Morgan 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 JP Morgan Exchange Traded are associated (or correlated) with IShares Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Yield Optimized has no effect on the direction of JP Morgan i.e., JP Morgan and IShares Yield go up and down completely randomly.
Pair Corralation between JP Morgan and IShares Yield
Given the investment horizon of 90 days JP Morgan is expected to generate 1.26 times less return on investment than IShares Yield. But when comparing it to its historical volatility, JP Morgan Exchange Traded is 2.85 times less risky than IShares Yield. It trades about 0.26 of its potential returns per unit of risk. iShares Yield Optimized is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,241 in iShares Yield Optimized on August 31, 2024 and sell it today you would earn a total of 16.00 from holding iShares Yield Optimized or generate 0.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JP Morgan Exchange Traded vs. iShares Yield Optimized
Performance |
| Timeline |
| JP Morgan Exchange |
| iShares Yield Optimized |
JP Morgan and IShares Yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JP Morgan and IShares Yield
The main advantage of trading using opposite JP Morgan and IShares Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JP Morgan position performs unexpectedly, IShares Yield 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 Yield will offset losses from the drop in IShares Yield's long position.| JP Morgan vs. JPMorgan Core Plus | JP Morgan vs. JPMorgan International Bond | JP Morgan vs. JPMorgan Ultra Short Income | JP Morgan vs. JPMorgan Short Duration |
| IShares Yield vs. iShares Interest Rate | IShares Yield vs. iShares Agency Bond | IShares Yield vs. iShares JP Morgan | IShares Yield vs. iShares Interest Rate |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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