Correlation Between IShares Core and JPMorgan Inflation

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

Diversification Opportunities for IShares Core and JPMorgan Inflation

-0.62

Correlation Coefficient

IShares Core  JPMorgan Inflation

Excellent diversification

The 3 months correlation between IShares and JPMorgan is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and JPMorgan Inflation Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Inflation 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 Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Inflation has no effect on the direction of IShares Core i.e., IShares Core and JPMorgan Inflation go up and down completely randomly.

Pair Corralation between IShares Core and JPMorgan Inflation

Considering the 90-day investment horizon iShares Core SP is expected to generate 5.74 times more return on investment than JPMorgan Inflation. However, IShares Core is 5.74 times more volatile than JPMorgan Inflation Managed. It trades about 0.23 of its potential returns per unit of risk. JPMorgan Inflation Managed is currently generating about -0.08 per unit of risk. If you would invest  50,761  in iShares Core SP on February 3, 2025 and sell it today you would earn a total of  6,173  from holding iShares Core SP or generate 12.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

iShares Core SP  vs.  JPMorgan Inflation Managed

iShares Core SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Core SP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, IShares Core is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

JPMorgan Inflation

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Inflation Managed are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, JPMorgan Inflation is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with IShares Core and JPMorgan Inflation

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

The idea behind iShares Core SP and JPMorgan Inflation Managed 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.