Correlation Between IShares JP and IShares Core
Can any of the company-specific risk be diversified away by investing in both IShares JP and IShares Core 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 JP and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares JP Morgan and iShares Core Canadian, you can compare the effects of market volatilities on IShares JP and IShares Core 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 JP with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares JP and IShares Core.
Diversification Opportunities for IShares JP and IShares Core
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IShares and IShares is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding iShares JP Morgan and iShares Core Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Canadian and IShares JP 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 JP Morgan are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Canadian has no effect on the direction of IShares JP i.e., IShares JP and IShares Core go up and down completely randomly.
Pair Corralation between IShares JP and IShares Core
Assuming the 90 days trading horizon iShares JP Morgan is expected to generate 1.36 times more return on investment than IShares Core. However, IShares JP is 1.36 times more volatile than iShares Core Canadian. It trades about 0.05 of its potential returns per unit of risk. iShares Core Canadian is currently generating about 0.06 per unit of risk. If you would invest 1,445 in iShares JP Morgan on August 27, 2024 and sell it today you would earn a total of 150.00 from holding iShares JP Morgan or generate 10.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares JP Morgan vs. iShares Core Canadian
Performance |
| Timeline |
| iShares JP Morgan |
| iShares Core Canadian |
IShares JP and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares JP and IShares Core
The main advantage of trading using opposite IShares JP and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares JP position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core's long position.| IShares JP vs. iShares IG Corporate | IShares JP vs. iShares 1 10Yr Laddered | IShares JP vs. iShares Floating Rate | IShares JP vs. iShares Convertible Bond |
| IShares Core vs. Franklin Global Aggregate | IShares Core vs. Franklin Large Cap | IShares Core vs. First Trust Senior | IShares Core vs. BMO Aggregate Bond |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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