Correlation Between VanEck Green and JPMorgan International

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

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

Diversification Opportunities for VanEck Green and JPMorgan International

0.9

Correlation Coefficient

VanEck Green  JPMorgan International

Almost no diversification

The 3 months correlation between VanEck and JPMorgan is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Green Bond and JPMorgan International Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan International and VanEck Green 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 Green Bond are associated (or correlated) with JPMorgan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan International has no effect on the direction of VanEck Green i.e., VanEck Green and JPMorgan International go up and down completely randomly.

Pair Corralation between VanEck Green and JPMorgan International

Given the investment horizon of 90 days VanEck Green Bond is expected to under-perform the JPMorgan International. In addition to that, VanEck Green is 1.24 times more volatile than JPMorgan International Bond. It trades about -0.03 of its total potential returns per unit of risk. JPMorgan International Bond is currently generating about 0.06 per unit of volatility. If you would invest  4,777  in JPMorgan International Bond on September 12, 2024 and sell it today you would earn a total of  29.00  from holding JPMorgan International Bond or generate 0.61% return on investment over 90 days.

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

VanEck Green Bond  vs.  JPMorgan International Bond

VanEck Green Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Green Bond has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, VanEck Green is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

JPMorgan International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan International Bond are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, JPMorgan International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with VanEck Green and JPMorgan International

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

The idea behind VanEck Green Bond and JPMorgan International Bond 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.