Correlation Between IShares Core and JPMorgan Ultra

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Can any of the company-specific risk be diversified away by investing in both IShares Core and JPMorgan 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 IShares Core and JPMorgan Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IShares Core SP and JPMorgan Ultra Short Municipal, you can compare the effects of market volatilities on IShares Core and JPMorgan 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 IShares Core with a short position of JPMorgan Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and JPMorgan Ultra.

Diversification Opportunities for IShares Core and JPMorgan Ultra

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between IShares and JPMorgan is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding IShares Core SP and JPMorgan Ultra-Short Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Ultra-Short and IShares Core 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 Core SP are associated (or correlated) with JPMorgan Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Ultra-Short has no effect on the direction of IShares Core i.e., IShares Core and JPMorgan Ultra go up and down completely randomly.

Pair Corralation between IShares Core and JPMorgan Ultra

Considering the 90-day investment horizon IShares Core SP is expected to generate 8.09 times more return on investment than JPMorgan Ultra. However, IShares Core is 8.09 times more volatile than JPMorgan Ultra Short Municipal. It trades about 0.27 of its potential returns per unit of risk. JPMorgan Ultra Short Municipal is currently generating about -0.07 per unit of risk. If you would invest  50,707  in IShares Core SP on December 30, 2023 and sell it today you would earn a total of  1,866  from holding IShares Core SP or generate 3.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

IShares Core SP  vs.  JPMorgan Ultra-Short Municipal

 Performance 
       Timeline  
IShares Core SP 

Risk-Adjusted Performance

19 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in IShares Core SP are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, IShares Core may actually be approaching a critical reversion point that can send shares even higher in April 2024.
JPMorgan Ultra-Short 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Ultra Short Municipal are ranked lower than 10 (%) 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 Core and JPMorgan Ultra Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IShares Core and JPMorgan Ultra

The main advantage of trading using opposite IShares Core and JPMorgan Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, JPMorgan 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 JPMorgan Ultra will offset losses from the drop in JPMorgan Ultra's long position.
The idea behind IShares Core SP and JPMorgan Ultra Short Municipal 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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