Correlation Between IShares JP and VanEck JP

Can any of the company-specific risk be diversified away by investing in both IShares JP and VanEck JP 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 VanEck JP 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 VanEck JP Morgan, you can compare the effects of market volatilities on IShares JP and VanEck JP 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 VanEck JP. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares JP and VanEck JP.

Diversification Opportunities for IShares JP and VanEck JP

0.98

Correlation Coefficient

IShares JP  VanEck JP

Almost no diversification

The 3 months correlation between IShares and VanEck is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares JP Morgan and VanEck JP Morgan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck JP Morgan 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 VanEck JP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck JP Morgan has no effect on the direction of IShares JP i.e., IShares JP and VanEck JP go up and down completely randomly.

Pair Corralation between IShares JP and VanEck JP

Given the investment horizon of 90 days iShares JP Morgan is expected to generate 0.84 times more return on investment than VanEck JP. However, iShares JP Morgan is 1.19 times less risky than VanEck JP. It trades about -0.08 of its potential returns per unit of risk. VanEck JP Morgan is currently generating about -0.09 per unit of risk. If you would invest  3,640  in iShares JP Morgan on March 13, 2024 and sell it today you would lose (72.00) from holding iShares JP Morgan or give up 1.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

iShares JP Morgan  vs.  VanEck JP Morgan

iShares JP Morgan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares JP Morgan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, IShares JP is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

VanEck JP Morgan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck JP Morgan has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, VanEck JP is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares JP and VanEck JP

The main advantage of trading using opposite IShares JP and VanEck JP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares JP position performs unexpectedly, VanEck JP 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 VanEck JP will offset losses from the drop in VanEck JP's long position.

The idea behind iShares JP Morgan and VanEck JP Morgan pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.