Correlation Between Vanguard and JPMorgan Fundamental

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

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

Diversification Opportunities for Vanguard and JPMorgan Fundamental

0.98

Correlation Coefficient

Vanguard  JPMorgan Fundamental

Almost no diversification

The 3 months correlation between Vanguard and JPMorgan is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP Small Cap and JPMorgan Fundamental Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Fundamental Data and Vanguard 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 SP Small Cap are associated (or correlated) with JPMorgan Fundamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Fundamental Data has no effect on the direction of Vanguard i.e., Vanguard and JPMorgan Fundamental go up and down completely randomly.

Pair Corralation between Vanguard and JPMorgan Fundamental

Given the investment horizon of 90 days Vanguard SP Small Cap is expected to under-perform the JPMorgan Fundamental. In addition to that, Vanguard is 1.17 times more volatile than JPMorgan Fundamental Data. It trades about -0.12 of its total potential returns per unit of risk. JPMorgan Fundamental Data is currently generating about -0.09 per unit of volatility. If you would invest  5,554  in JPMorgan Fundamental Data on December 29, 2024 and sell it today you would lose (318.00) from holding JPMorgan Fundamental Data or give up 5.73% of portfolio value over 90 days.

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

Vanguard SP Small Cap  vs.  JPMorgan Fundamental Data

Vanguard SP Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard SP Small Cap has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

JPMorgan Fundamental Data

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Vanguard and JPMorgan Fundamental

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

The idea behind Vanguard SP Small Cap and JPMorgan Fundamental Data 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.