Correlation Between Jpmorgan Strategic and Vanguard 500

Can any of the company-specific risk be diversified away by investing in both Jpmorgan Strategic and Vanguard 500 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 Strategic and Vanguard 500 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jpmorgan Strategic Income and Vanguard 500 Index, you can compare the effects of market volatilities on Jpmorgan Strategic and Vanguard 500 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 Strategic with a short position of Vanguard 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan Strategic and Vanguard 500.

Diversification Opportunities for Jpmorgan Strategic and Vanguard 500

-0.52

Correlation Coefficient

Jpmorgan Strategic  Vanguard 500

Excellent diversification

The 3 months correlation between Jpmorgan and Vanguard is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Strategic Income and Vanguard 500 Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard 500 Index and Jpmorgan Strategic 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 Strategic Income are associated (or correlated) with Vanguard 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard 500 Index has no effect on the direction of Jpmorgan Strategic i.e., Jpmorgan Strategic and Vanguard 500 go up and down completely randomly.

Pair Corralation between Jpmorgan Strategic and Vanguard 500

Assuming the 90 days horizon Jpmorgan Strategic Income is expected to generate 0.05 times more return on investment than Vanguard 500. However, Jpmorgan Strategic Income is 18.68 times less risky than Vanguard 500. It trades about 0.33 of its potential returns per unit of risk. Vanguard 500 Index is currently generating about -0.08 per unit of risk. If you would invest  1,135  in Jpmorgan Strategic Income on December 22, 2024 and sell it today you would earn a total of  12.00  from holding Jpmorgan Strategic Income or generate 1.06% return on investment over 90 days.

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

Jpmorgan Strategic Income  vs.  Vanguard 500 Index

Jpmorgan Strategic Income

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Strategic Income are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Jpmorgan Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard 500 Index

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard 500 Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Vanguard 500 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 Strategic and Vanguard 500

The main advantage of trading using opposite Jpmorgan Strategic and Vanguard 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jpmorgan Strategic position performs unexpectedly, Vanguard 500 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 500 will offset losses from the drop in Vanguard 500's long position.

The idea behind Jpmorgan Strategic Income and Vanguard 500 Index 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.