Correlation Between Vanguard Developed and Johcm International

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

By analyzing existing cross correlation between Vanguard Developed Markets and Johcm International Opportunities, you can compare the effects of market volatilities on Vanguard Developed and Johcm International 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 Vanguard Developed with a short position of Johcm International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Developed and Johcm International.

Diversification Opportunities for Vanguard Developed and Johcm International

0.96

Correlation Coefficient

Vanguard Developed  Johcm International

Almost no diversification

The 3 months correlation between Vanguard and Johcm is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Developed Markets and Johcm International Opportunit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johcm International and Vanguard Developed 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 Vanguard Developed Markets are associated (or correlated) with Johcm International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johcm International has no effect on the direction of Vanguard Developed i.e., Vanguard Developed and Johcm International go up and down completely randomly.

Pair Corralation between Vanguard Developed and Johcm International

Assuming the 90 days horizon Vanguard Developed is expected to generate 5.12 times less return on investment than Johcm International. In addition to that, Vanguard Developed is 1.09 times more volatile than Johcm International Opportunities. It trades about 0.03 of its total potential returns per unit of risk. Johcm International Opportunities is currently generating about 0.17 per unit of volatility. If you would invest  1,275  in Johcm International Opportunities on December 29, 2024 and sell it today you would earn a total of  47.00  from holding Johcm International Opportunities or generate 3.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.65%
Values	Daily Returns

Vanguard Developed Markets  vs.  Johcm International Opportunit

Vanguard Developed

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Developed Markets are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Developed may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Johcm International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Johcm International Opportunities are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Johcm International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Vanguard Developed and Johcm International

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

The idea behind Vanguard Developed Markets and Johcm International Opportunities 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.