Correlation Between Vanguard FTSE and JPMorgan

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

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

Diversification Opportunities for Vanguard FTSE and JPMorgan

0.0

Correlation Coefficient

Vanguard FTSE  JPMorgan

Pay attention - limited upside

The 3 months correlation between Vanguard and JPMorgan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Developed and JPMorgan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan and Vanguard FTSE 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 FTSE Developed are associated (or correlated) with JPMorgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and JPMorgan go up and down completely randomly.

Pair Corralation between Vanguard FTSE and JPMorgan

If you would invest  4,961  in Vanguard FTSE Developed on December 2, 2024 and sell it today you would earn a total of  146.00  from holding Vanguard FTSE Developed or generate 2.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Vanguard FTSE Developed  vs.  JPMorgan

Vanguard FTSE Developed

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard FTSE Developed are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Vanguard FTSE is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

JPMorgan

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Vanguard FTSE and JPMorgan

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

The idea behind Vanguard FTSE Developed and JPMorgan 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.

Check out your portfolio center.

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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.