Correlation Between JPMorgan International and VanEck Green

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

By analyzing existing cross correlation between JPMorgan International Bond and VanEck Green Bond, you can compare the effects of market volatilities on JPMorgan International and VanEck Green 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 International with a short position of VanEck Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan International and VanEck Green.

Diversification Opportunities for JPMorgan International and VanEck Green

0.89

Correlation Coefficient

JPMorgan International  VanEck Green

Very poor diversification

The 3 months correlation between JPMorgan and VanEck is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan International Bond and VanEck Green Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Green Bond and JPMorgan International 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 International Bond are associated (or correlated) with VanEck Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Green Bond has no effect on the direction of JPMorgan International i.e., JPMorgan International and VanEck Green go up and down completely randomly.

Pair Corralation between JPMorgan International and VanEck Green

Given the investment horizon of 90 days JPMorgan International Bond is expected to generate 0.8 times more return on investment than VanEck Green. However, JPMorgan International Bond is 1.25 times less risky than VanEck Green. It trades about -0.03 of its potential returns per unit of risk. VanEck Green Bond is currently generating about -0.11 per unit of risk. If you would invest  4,800  in JPMorgan International Bond on September 16, 2024 and sell it today you would lose (16.00) from holding JPMorgan International Bond or give up 0.33% of portfolio value over 90 days.

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

JPMorgan International Bond  vs.  VanEck Green Bond

JPMorgan International

Risk-Adjusted Performance

0 of 100

Very Weak

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

VanEck Green Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with JPMorgan International and VanEck Green

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

The idea behind JPMorgan International Bond and VanEck Green Bond 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.