Correlation Between Vanguard Long-term and Jpmorgan Short-intermedia

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

By analyzing existing cross correlation between Vanguard Long Term Tax Exempt and Jpmorgan Short Intermediate Municipal, you can compare the effects of market volatilities on Vanguard Long-term and Jpmorgan Short-intermedia 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 Long-term with a short position of Jpmorgan Short-intermedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Long-term and Jpmorgan Short-intermedia.

Diversification Opportunities for Vanguard Long-term and Jpmorgan Short-intermedia

0.7

Correlation Coefficient

Vanguard Long-term  Jpmorgan Short-intermedia

Poor diversification

The 3 months correlation between Vanguard and Jpmorgan is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Long Term Tax Exempt and Jpmorgan Short Intermediate Mu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Short-intermedia and Vanguard Long-term 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 Long Term Tax Exempt are associated (or correlated) with Jpmorgan Short-intermedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Short-intermedia has no effect on the direction of Vanguard Long-term i.e., Vanguard Long-term and Jpmorgan Short-intermedia go up and down completely randomly.

Pair Corralation between Vanguard Long-term and Jpmorgan Short-intermedia

Assuming the 90 days horizon Vanguard Long Term Tax Exempt is expected to under-perform the Jpmorgan Short-intermedia. In addition to that, Vanguard Long-term is 2.56 times more volatile than Jpmorgan Short Intermediate Municipal. It trades about -0.08 of its total potential returns per unit of risk. Jpmorgan Short Intermediate Municipal is currently generating about 0.05 per unit of volatility. If you would invest  1,016  in Jpmorgan Short Intermediate Municipal on December 31, 2024 and sell it today you would earn a total of  3.00  from holding Jpmorgan Short Intermediate Municipal or generate 0.3% return on investment over 90 days.

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

Vanguard Long Term Tax Exempt  vs.  Jpmorgan Short Intermediate Mu

Vanguard Long Term

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Long Term Tax Exempt has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Vanguard Long-term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jpmorgan Short-intermedia

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Short Intermediate Municipal are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Jpmorgan Short-intermedia 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 Long-term and Jpmorgan Short-intermedia

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

The idea behind Vanguard Long Term Tax Exempt and Jpmorgan Short Intermediate 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.