Correlation Between JPMorgan BetaBuilders and IShares Cohen

Can any of the company-specific risk be diversified away by investing in both JPMorgan BetaBuilders and IShares Cohen 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 JPMorgan BetaBuilders and IShares Cohen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JPMorgan BetaBuilders MSCI and iShares Cohen Steers, you can compare the effects of market volatilities on JPMorgan BetaBuilders and IShares Cohen 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 JPMorgan BetaBuilders with a short position of IShares Cohen. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan BetaBuilders and IShares Cohen.

Diversification Opportunities for JPMorgan BetaBuilders and IShares Cohen

0.99

Correlation Coefficient

JPMorgan BetaBuilders  IShares Cohen

No risk reduction

The 3 months correlation between JPMorgan and IShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan BetaBuilders MSCI and iShares Cohen Steers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Cohen Steers and JPMorgan BetaBuilders 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 JPMorgan BetaBuilders MSCI are associated (or correlated) with IShares Cohen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Cohen Steers has no effect on the direction of JPMorgan BetaBuilders i.e., JPMorgan BetaBuilders and IShares Cohen go up and down completely randomly.

Pair Corralation between JPMorgan BetaBuilders and IShares Cohen

Given the investment horizon of 90 days JPMorgan BetaBuilders MSCI is expected to generate 1.01 times more return on investment than IShares Cohen. However, JPMorgan BetaBuilders is 1.01 times more volatile than iShares Cohen Steers. It trades about -0.08 of its potential returns per unit of risk. iShares Cohen Steers is currently generating about -0.12 per unit of risk. If you would invest  8,529  in JPMorgan BetaBuilders MSCI on January 26, 2024 and sell it today you would lose (222.00) from holding JPMorgan BetaBuilders MSCI or give up 2.6% of portfolio value over 90 days.

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

JPMorgan BetaBuilders MSCI  vs.  iShares Cohen Steers

JPMorgan BetaBuilders

Risk-Adjusted Performance

0 of 100

Very Weak

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

iShares Cohen Steers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Cohen Steers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, IShares Cohen is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with JPMorgan BetaBuilders and IShares Cohen

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

The idea behind JPMorgan BetaBuilders MSCI and iShares Cohen Steers 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.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.