Correlation Between JPMorgan Ultra and IShares Ultra

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

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

Diversification Opportunities for JPMorgan Ultra and IShares Ultra

1.0

Correlation Coefficient

JPMorgan Ultra  IShares Ultra

No risk reduction

The 3 months correlation between JPMorgan and IShares is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Ultra Short Income and iShares Ultra Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Ultra Short and JPMorgan Ultra 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 Ultra Short Income are associated (or correlated) with IShares Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Ultra Short has no effect on the direction of JPMorgan Ultra i.e., JPMorgan Ultra and IShares Ultra go up and down completely randomly.

Pair Corralation between JPMorgan Ultra and IShares Ultra

Given the investment horizon of 90 days JPMorgan Ultra is expected to generate 1.02 times less return on investment than IShares Ultra. But when comparing it to its historical volatility, JPMorgan Ultra Short Income is 1.03 times less risky than IShares Ultra. It trades about 0.19 of its potential returns per unit of risk. iShares Ultra Short Term is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  5,005  in iShares Ultra Short Term on January 24, 2024 and sell it today you would earn a total of  41.00  from holding iShares Ultra Short Term or generate 0.82% return on investment over 90 days.

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

JPMorgan Ultra Short Income  vs.  iShares Ultra Short Term

JPMorgan Ultra Short

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Ultra Short Income are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, JPMorgan Ultra is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

iShares Ultra Short

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Ultra Short Term are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, IShares Ultra is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with JPMorgan Ultra and IShares Ultra

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

The idea behind JPMorgan Ultra Short Income and iShares Ultra Short Term 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.