Correlation Between IShares MSCI and JC Penney

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

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

Diversification Opportunities for IShares MSCI and JC Penney

0.0

Correlation Coefficient

IShares MSCI  JC Penney

Pay attention - limited upside

The 3 months correlation between IShares and JCP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI USA and J C Penney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J C Penney and IShares MSCI 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 MSCI USA are associated (or correlated) with JC Penney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J C Penney has no effect on the direction of IShares MSCI i.e., IShares MSCI and JC Penney go up and down completely randomly.

Pair Corralation between IShares MSCI and JC Penney

If you would invest (100.00) in J C Penney on February 5, 2024 and sell it today you would earn a total of  100.00  from holding J C Penney or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

iShares MSCI USA  vs.  J C Penney

iShares MSCI USA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI USA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable primary indicators, IShares MSCI is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

J C Penney

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days J C Penney has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, JC Penney is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with IShares MSCI and JC Penney

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

The idea behind iShares MSCI USA and J C Penney 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .