Correlation Between IShares Ultra and JPMorgan Ultra

Can any of the company-specific risk be diversified away by investing in both IShares Ultra 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 Ultra 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 Ultra Short Term and JPMorgan Ultra Short Income, you can compare the effects of market volatilities on IShares Ultra 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 Ultra with a short position of JPMorgan Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Ultra and JPMorgan Ultra.

Diversification Opportunities for IShares Ultra and JPMorgan Ultra

0.99

Correlation Coefficient

IShares Ultra  JPMorgan Ultra

No risk reduction

The 3 months correlation between IShares and JPMorgan is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares Ultra Short Term and JPMorgan Ultra Short Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Ultra Short and IShares 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 iShares Ultra Short Term 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 Ultra i.e., IShares Ultra and JPMorgan Ultra go up and down completely randomly.

Pair Corralation between IShares Ultra and JPMorgan Ultra

Given the investment horizon of 90 days iShares Ultra Short Term is expected to generate 0.91 times more return on investment than JPMorgan Ultra. However, iShares Ultra Short Term is 1.1 times less risky than JPMorgan Ultra. It trades about 0.42 of its potential returns per unit of risk. JPMorgan Ultra Short Income is currently generating about 0.27 per unit of risk. If you would invest  5,037  in iShares Ultra Short Term on August 15, 2024 and sell it today you would earn a total of  14.00  from holding iShares Ultra Short Term or generate 0.28% return on investment over 90 days.

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

iShares Ultra Short Term  vs.  JPMorgan Ultra Short Income

iShares Ultra Short

Risk-Adjusted Performance

52 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Ultra Short Term are ranked lower than 52 (%) 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.

JPMorgan Ultra Short

Risk-Adjusted Performance

35 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Ultra Short Income are ranked lower than 35 (%) 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Ultra and JPMorgan Ultra

The main advantage of trading using opposite IShares Ultra and JPMorgan Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Ultra 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 Ultra Short Term and JPMorgan Ultra Short Income 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.