Correlation Between Vanguard Energy and Jpmorgan Strategic

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

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

Diversification Opportunities for Vanguard Energy and Jpmorgan Strategic

-0.27

Correlation Coefficient

Vanguard Energy  Jpmorgan Strategic

Very good diversification

The 3 months correlation between Vanguard and JPMORGAN is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Energy Index and Jpmorgan Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Strategic Income and Vanguard Energy 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 Energy Index are associated (or correlated) with Jpmorgan Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Strategic Income has no effect on the direction of Vanguard Energy i.e., Vanguard Energy and Jpmorgan Strategic go up and down completely randomly.

Pair Corralation between Vanguard Energy and Jpmorgan Strategic

Assuming the 90 days horizon Vanguard Energy Index is expected to generate 19.93 times more return on investment than Jpmorgan Strategic. However, Vanguard Energy is 19.93 times more volatile than Jpmorgan Strategic Income. It trades about 0.51 of its potential returns per unit of risk. Jpmorgan Strategic Income is currently generating about 0.32 per unit of risk. If you would invest  5,965  in Vanguard Energy Index on October 25, 2024 and sell it today you would earn a total of  510.00  from holding Vanguard Energy Index or generate 8.55% return on investment over 90 days.

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

Vanguard Energy Index  vs.  Jpmorgan Strategic Income

Vanguard Energy Index

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Energy Index are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jpmorgan Strategic Income

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Strategic Income are ranked lower than 29 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Jpmorgan Strategic 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 Energy and Jpmorgan Strategic

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

The idea behind Vanguard Energy Index and Jpmorgan Strategic Income 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.