Correlation Between Vanguard Short and JPMorgan International

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

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

Diversification Opportunities for Vanguard Short and JPMorgan International

0.94

Correlation Coefficient

Vanguard Short  JPMorgan International

Almost no diversification

The 3 months correlation between Vanguard and JPMorgan is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Short Term 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 Vanguard Short 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 Short Term 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 Vanguard Short i.e., Vanguard Short and JPMorgan International go up and down completely randomly.

Pair Corralation between Vanguard Short and JPMorgan International

Considering the 90-day investment horizon Vanguard Short is expected to generate 2.43 times less return on investment than JPMorgan International. But when comparing it to its historical volatility, Vanguard Short Term Bond is 1.56 times less risky than JPMorgan International. It trades about 0.12 of its potential returns per unit of risk. JPMorgan International Bond is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  4,720  in JPMorgan International Bond on April 17, 2025 and sell it today you would earn a total of  112.00  from holding JPMorgan International Bond or generate 2.37% return on investment over 90 days.

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

Vanguard Short Term Bond  vs.  JPMorgan International Bond

Vanguard Short Term

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Short Term Bond are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Vanguard Short is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

JPMorgan International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan International Bond are ranked lower than 14 (%) 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 Vanguard Short and JPMorgan International

The main advantage of trading using opposite Vanguard Short and JPMorgan International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Short 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 Vanguard Short Term 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.