Correlation Between Vanguard FTSE and JP Morgan

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

By analyzing existing cross correlation between Vanguard FTSE All World and JP Morgan Exchange Traded, you can compare the effects of market volatilities on Vanguard FTSE and JP Morgan 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 JP Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and JP Morgan.

Diversification Opportunities for Vanguard FTSE and JP Morgan

0.86

Correlation Coefficient

Vanguard FTSE  JP Morgan

Very poor diversification

The 3 months correlation between Vanguard and JIRE is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE All World and JP Morgan Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JP Morgan Exchange 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 All World are associated (or correlated) with JP Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JP Morgan Exchange has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and JP Morgan go up and down completely randomly.

Pair Corralation between Vanguard FTSE and JP Morgan

Considering the 90-day investment horizon Vanguard FTSE All World is expected to generate 0.93 times more return on investment than JP Morgan. However, Vanguard FTSE All World is 1.07 times less risky than JP Morgan. It trades about -0.06 of its potential returns per unit of risk. JP Morgan Exchange Traded is currently generating about -0.12 per unit of risk. If you would invest  6,143  in Vanguard FTSE All World on August 30, 2024 and sell it today you would lose (213.00) from holding Vanguard FTSE All World or give up 3.47% of portfolio value over 90 days.

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

Vanguard FTSE All World  vs.  JP Morgan Exchange Traded

Vanguard FTSE All

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard FTSE All World has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Vanguard FTSE is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

JP Morgan Exchange

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JP Morgan Exchange Traded has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Vanguard FTSE and JP Morgan

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

The idea behind Vanguard FTSE All World and JP Morgan Exchange Traded 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.