Correlation Between VanEck Defense and JPMorgan ETFs

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

By analyzing existing cross correlation between VanEck Defense ETF and JPMorgan ETFs ICAV, you can compare the effects of market volatilities on VanEck Defense and JPMorgan ETFs 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 VanEck Defense with a short position of JPMorgan ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Defense and JPMorgan ETFs.

Diversification Opportunities for VanEck Defense and JPMorgan ETFs

-0.63

Correlation Coefficient

VanEck Defense  JPMorgan ETFs

Excellent diversification

The 3 months correlation between VanEck and JPMorgan is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Defense ETF and JPMorgan ETFs ICAV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan ETFs ICAV and VanEck Defense 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 VanEck Defense ETF are associated (or correlated) with JPMorgan ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan ETFs ICAV has no effect on the direction of VanEck Defense i.e., VanEck Defense and JPMorgan ETFs go up and down completely randomly.

Pair Corralation between VanEck Defense and JPMorgan ETFs

Assuming the 90 days trading horizon VanEck Defense ETF is expected to generate 1.62 times more return on investment than JPMorgan ETFs. However, VanEck Defense is 1.62 times more volatile than JPMorgan ETFs ICAV. It trades about 0.13 of its potential returns per unit of risk. JPMorgan ETFs ICAV is currently generating about -0.02 per unit of risk. If you would invest  2,861  in VanEck Defense ETF on September 30, 2024 and sell it today you would earn a total of  620.00  from holding VanEck Defense ETF or generate 21.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.21%
Values	Daily Returns

VanEck Defense ETF  vs.  JPMorgan ETFs ICAV

VanEck Defense ETF

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Defense ETF are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, VanEck Defense may actually be approaching a critical reversion point that can send shares even higher in January 2025.

JPMorgan ETFs ICAV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMorgan ETFs ICAV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, JPMorgan ETFs is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with VanEck Defense and JPMorgan ETFs

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

The idea behind VanEck Defense ETF and JPMorgan ETFs ICAV 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.