Correlation Between Vanguard Small and Voya Jpmorgan

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

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

Diversification Opportunities for Vanguard Small and Voya Jpmorgan

0.95

Correlation Coefficient

Vanguard Small  Voya Jpmorgan

Almost no diversification

The 3 months correlation between Vanguard and Voya is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and Voya Jpmorgan Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Jpmorgan Small and Vanguard Small 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 Small Cap Index are associated (or correlated) with Voya Jpmorgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Jpmorgan Small has no effect on the direction of Vanguard Small i.e., Vanguard Small and Voya Jpmorgan go up and down completely randomly.

Pair Corralation between Vanguard Small and Voya Jpmorgan

Assuming the 90 days horizon Vanguard Small Cap Index is expected to generate 0.84 times more return on investment than Voya Jpmorgan. However, Vanguard Small Cap Index is 1.19 times less risky than Voya Jpmorgan. It trades about 0.22 of its potential returns per unit of risk. Voya Jpmorgan Small is currently generating about 0.14 per unit of risk. If you would invest  31,208  in Vanguard Small Cap Index on September 12, 2024 and sell it today you would earn a total of  4,290  from holding Vanguard Small Cap Index or generate 13.75% return on investment over 90 days.

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

Vanguard Small Cap Index  vs.  Voya Jpmorgan Small

Vanguard Small Cap

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Small Cap Index are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Small showed solid returns over the last few months and may actually be approaching a breakup point.

Voya Jpmorgan Small

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Jpmorgan Small are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Voya Jpmorgan may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vanguard Small and Voya Jpmorgan

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

The idea behind Vanguard Small Cap Index and Voya Jpmorgan Small 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.