Correlation Between Jpmorgan Equity and Vanguard High

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

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

Diversification Opportunities for Jpmorgan Equity and Vanguard High

0.37

Correlation Coefficient

Jpmorgan Equity  Vanguard High

Weak diversification

The 3 months correlation between Jpmorgan and Vanguard is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Equity Fund and Vanguard High Yield Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard High Yield and Jpmorgan Equity 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 Jpmorgan Equity Fund are associated (or correlated) with Vanguard High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard High Yield has no effect on the direction of Jpmorgan Equity i.e., Jpmorgan Equity and Vanguard High go up and down completely randomly.

Pair Corralation between Jpmorgan Equity and Vanguard High

Assuming the 90 days horizon Jpmorgan Equity Fund is expected to generate 5.26 times more return on investment than Vanguard High. However, Jpmorgan Equity is 5.26 times more volatile than Vanguard High Yield Corporate. It trades about 0.17 of its potential returns per unit of risk. Vanguard High Yield Corporate is currently generating about 0.06 per unit of risk. If you would invest  2,529  in Jpmorgan Equity Fund on September 14, 2024 and sell it today you would earn a total of  202.00  from holding Jpmorgan Equity Fund or generate 7.99% return on investment over 90 days.

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

Jpmorgan Equity Fund  vs.  Vanguard High Yield Corporate

Jpmorgan Equity

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Equity Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Jpmorgan Equity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Vanguard High Yield

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard High Yield Corporate are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jpmorgan Equity and Vanguard High

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

The idea behind Jpmorgan Equity Fund and Vanguard High Yield Corporate 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.