Correlation Between Vanguard FTSE and JPMorgan Ultra

Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and JPMorgan Ultra 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 Ultra 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 Ultra Short Municipal, you can compare the effects of market volatilities on Vanguard FTSE and JPMorgan Ultra 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 Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and JPMorgan Ultra.

Diversification Opportunities for Vanguard FTSE and JPMorgan Ultra

0.94

Correlation Coefficient

Vanguard FTSE  JPMorgan Ultra

Almost no diversification

The 3 months correlation between Vanguard and JPMorgan is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Developed and JPMorgan Ultra Short Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Ultra Short 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 Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Ultra Short has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and JPMorgan Ultra go up and down completely randomly.

Pair Corralation between Vanguard FTSE and JPMorgan Ultra

Considering the 90-day investment horizon Vanguard FTSE Developed is expected to generate 20.45 times more return on investment than JPMorgan Ultra. However, Vanguard FTSE is 20.45 times more volatile than JPMorgan Ultra Short Municipal. It trades about 0.14 of its potential returns per unit of risk. JPMorgan Ultra Short Municipal is currently generating about 0.28 per unit of risk. If you would invest  4,759  in Vanguard FTSE Developed on December 29, 2024 and sell it today you would earn a total of  365.00  from holding Vanguard FTSE Developed or generate 7.67% return on investment over 90 days.

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

Vanguard FTSE Developed  vs.  JPMorgan Ultra Short Municipal

Vanguard FTSE Developed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard FTSE Developed are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Vanguard FTSE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

JPMorgan Ultra Short

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Ultra Short Municipal are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, JPMorgan Ultra is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Vanguard FTSE and JPMorgan Ultra

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

The idea behind Vanguard FTSE Developed and JPMorgan Ultra Short Municipal 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.