Correlation Between JPMorgan BetaBuilders and IShares Real

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

Diversification Opportunities for JPMorgan BetaBuilders and IShares Real

0.99

Correlation Coefficient

JPMorgan BetaBuilders  IShares Real

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 Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Real Estate 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 Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Real Estate has no effect on the direction of JPMorgan BetaBuilders i.e., JPMorgan BetaBuilders and IShares Real go up and down completely randomly.

Pair Corralation between JPMorgan BetaBuilders and IShares Real

Given the investment horizon of 90 days JPMorgan BetaBuilders MSCI is expected to generate 0.99 times more return on investment than IShares Real. However, JPMorgan BetaBuilders MSCI is 1.01 times less risky than IShares Real. It trades about 0.01 of its potential returns per unit of risk. iShares Real Estate is currently generating about 0.0 per unit of risk. If you would invest  8,359  in JPMorgan BetaBuilders MSCI on January 25, 2024 and sell it today you would lose (49.00) from holding JPMorgan BetaBuilders MSCI or give up 0.59% 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 Real Estate

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 Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, IShares Real is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with JPMorgan BetaBuilders and IShares Real

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

The idea behind JPMorgan BetaBuilders MSCI and iShares Real Estate 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.