Correlation Between JPMorgan Active and Vanguard High

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

By analyzing existing cross correlation between JPMorgan Active Value and Vanguard High Dividend, you can compare the effects of market volatilities on JPMorgan Active and Vanguard High 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 Active with a short position of Vanguard High. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Active and Vanguard High.

Diversification Opportunities for JPMorgan Active and Vanguard High

0.93

Correlation Coefficient

JPMorgan Active  Vanguard High

Almost no diversification

The 3 months correlation between JPMorgan and Vanguard is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Active Value and Vanguard High Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard High Dividend and JPMorgan Active 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 Active Value are associated (or correlated) with Vanguard High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard High Dividend has no effect on the direction of JPMorgan Active i.e., JPMorgan Active and Vanguard High go up and down completely randomly.

Pair Corralation between JPMorgan Active and Vanguard High

Given the investment horizon of 90 days JPMorgan Active is expected to generate 6.19 times less return on investment than Vanguard High. In addition to that, JPMorgan Active is 1.04 times more volatile than Vanguard High Dividend. It trades about 0.0 of its total potential returns per unit of risk. Vanguard High Dividend is currently generating about 0.02 per unit of volatility. If you would invest  12,649  in Vanguard High Dividend on December 28, 2024 and sell it today you would earn a total of  106.00  from holding Vanguard High Dividend or generate 0.84% return on investment over 90 days.

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

JPMorgan Active Value  vs.  Vanguard High Dividend

JPMorgan Active Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days JPMorgan Active Value has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, JPMorgan Active is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Vanguard High Dividend

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard High Dividend are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Vanguard High is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with JPMorgan Active and Vanguard High

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

The idea behind JPMorgan Active Value and Vanguard High Dividend 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.