Correlation Between FlexShares IBoxx and JPMorgan Inflation
Can any of the company-specific risk be diversified away by investing in both FlexShares IBoxx and JPMorgan Inflation 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 FlexShares IBoxx and JPMorgan Inflation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FlexShares iBoxx 5 Year and JPMorgan Inflation Managed, you can compare the effects of market volatilities on FlexShares IBoxx and JPMorgan Inflation 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 FlexShares IBoxx with a short position of JPMorgan Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares IBoxx and JPMorgan Inflation.
Diversification Opportunities for FlexShares IBoxx and JPMorgan Inflation
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FlexShares and JPMorgan is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares iBoxx 5 Year and JPMorgan Inflation Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Inflation and FlexShares IBoxx 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 FlexShares iBoxx 5 Year are associated (or correlated) with JPMorgan Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Inflation has no effect on the direction of FlexShares IBoxx i.e., FlexShares IBoxx and JPMorgan Inflation go up and down completely randomly.
Pair Corralation between FlexShares IBoxx and JPMorgan Inflation
Given the investment horizon of 90 days FlexShares iBoxx 5 Year is expected to under-perform the JPMorgan Inflation. In addition to that, FlexShares IBoxx is 1.04 times more volatile than JPMorgan Inflation Managed. It trades about -0.14 of its total potential returns per unit of risk. JPMorgan Inflation Managed is currently generating about -0.14 per unit of volatility. If you would invest 4,730 in JPMorgan Inflation Managed on August 25, 2024 and sell it today you would lose (29.00) from holding JPMorgan Inflation Managed or give up 0.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FlexShares iBoxx 5 Year vs. JPMorgan Inflation Managed
Performance |
| Timeline |
| FlexShares iBoxx 5 |
| JPMorgan Inflation |
FlexShares IBoxx and JPMorgan Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares IBoxx and JPMorgan Inflation
The main advantage of trading using opposite FlexShares IBoxx and JPMorgan Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares IBoxx position performs unexpectedly, JPMorgan Inflation 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 Inflation will offset losses from the drop in JPMorgan Inflation's long position.| FlexShares IBoxx vs. PIMCO 1 5 Year | FlexShares IBoxx vs. PIMCO 15 Year | FlexShares IBoxx vs. SPDR Bloomberg 1 10 | FlexShares IBoxx vs. FlexShares iBoxx 3 Year |
| 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 5 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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