Correlation Between Vanguard Long and JPMorgan Short
Can any of the company-specific risk be diversified away by investing in both Vanguard Long and JPMorgan Short 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 and JPMorgan Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Long Term Bond and JPMorgan Short Duration, you can compare the effects of market volatilities on Vanguard Long and JPMorgan Short 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 with a short position of JPMorgan Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Long and JPMorgan Short.
Diversification Opportunities for Vanguard Long and JPMorgan Short
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and JPMorgan is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Long Term Bond and JPMorgan Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Short Duration and Vanguard Long 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 Bond are associated (or correlated) with JPMorgan Short. 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 Duration has no effect on the direction of Vanguard Long i.e., Vanguard Long and JPMorgan Short go up and down completely randomly.
Pair Corralation between Vanguard Long and JPMorgan Short
Considering the 90-day investment horizon Vanguard Long Term Bond is expected to generate 7.07 times more return on investment than JPMorgan Short. However, Vanguard Long is 7.07 times more volatile than JPMorgan Short Duration. It trades about 0.05 of its potential returns per unit of risk. JPMorgan Short Duration is currently generating about 0.23 per unit of risk. If you would invest 7,002 in Vanguard Long Term Bond on September 19, 2024 and sell it today you would earn a total of 50.00 from holding Vanguard Long Term Bond or generate 0.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Long Term Bond vs. JPMorgan Short Duration
Performance |
| Timeline |
| Vanguard Long Term |
| JPMorgan Short Duration |
Vanguard Long and JPMorgan Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Long and JPMorgan Short
The main advantage of trading using opposite Vanguard Long and JPMorgan Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Long position performs unexpectedly, JPMorgan Short 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 will offset losses from the drop in JPMorgan Short's long position.| Vanguard Long vs. Vanguard Intermediate Term Bond | Vanguard Long vs. Vanguard Short Term Bond | Vanguard Long vs. Vanguard Long Term Corporate | Vanguard Long vs. Vanguard Long Term Treasury |
| JPMorgan Short vs. Vanguard Intermediate Term Bond | JPMorgan Short vs. Vanguard Long Term Bond | JPMorgan Short vs. Vanguard Total Bond | JPMorgan Short vs. Vanguard Intermediate Term Corporate |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |