Correlation Between IShares National and JPMorgan Municipal
Can any of the company-specific risk be diversified away by investing in both IShares National and JPMorgan Municipal 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 National and JPMorgan Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares National Muni and JPMorgan Municipal, you can compare the effects of market volatilities on IShares National and JPMorgan Municipal 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 National with a short position of JPMorgan Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares National and JPMorgan Municipal.
Diversification Opportunities for IShares National and JPMorgan Municipal
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and JPMorgan is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares National Muni and JPMorgan Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Municipal and IShares National 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 National Muni are associated (or correlated) with JPMorgan Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Municipal has no effect on the direction of IShares National i.e., IShares National and JPMorgan Municipal go up and down completely randomly.
Pair Corralation between IShares National and JPMorgan Municipal
Considering the 90-day investment horizon IShares National is expected to generate 1.08 times less return on investment than JPMorgan Municipal. In addition to that, IShares National is 1.26 times more volatile than JPMorgan Municipal. It trades about 0.07 of its total potential returns per unit of risk. JPMorgan Municipal is currently generating about 0.09 per unit of volatility. If you would invest 4,844 in JPMorgan Municipal on August 26, 2024 and sell it today you would earn a total of 213.00 from holding JPMorgan Municipal or generate 4.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares National Muni vs. JPMorgan Municipal
Performance |
| Timeline |
| iShares National Muni |
| JPMorgan Municipal |
IShares National and JPMorgan Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares National and JPMorgan Municipal
The main advantage of trading using opposite IShares National and JPMorgan Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares National position performs unexpectedly, JPMorgan Municipal 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 Municipal will offset losses from the drop in JPMorgan Municipal's long position.| IShares National vs. BlackRock Intermediate Muni | IShares National vs. SSGA Active Trust | IShares National vs. SPDR MarketAxess Investment | IShares National vs. SSGA Active Trust |
| JPMorgan Municipal vs. BlackRock Intermediate Muni | JPMorgan Municipal vs. SSGA Active Trust | JPMorgan Municipal vs. SPDR MarketAxess Investment | JPMorgan Municipal vs. SSGA Active Trust |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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