Correlation Between Vanguard International and Coretronic

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

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

Diversification Opportunities for Vanguard International and Coretronic

0.41

Correlation Coefficient

Vanguard International  Coretronic

Very weak diversification

The 3 months correlation between Vanguard and Coretronic is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard International Semicon and Coretronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coretronic and Vanguard International 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 International Semiconductor are associated (or correlated) with Coretronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coretronic has no effect on the direction of Vanguard International i.e., Vanguard International and Coretronic go up and down completely randomly.

Pair Corralation between Vanguard International and Coretronic

Assuming the 90 days trading horizon Vanguard International Semiconductor is expected to under-perform the Coretronic. But the stock apears to be less risky and, when comparing its historical volatility, Vanguard International Semiconductor is 1.52 times less risky than Coretronic. The stock trades about 0.0 of its potential returns per unit of risk. The Coretronic is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  7,580  in Coretronic on October 8, 2024 and sell it today you would earn a total of  1,370  from holding Coretronic or generate 18.07% return on investment over 90 days.

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

Vanguard International Semicon  vs.  Coretronic

Vanguard International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard International Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Vanguard International is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Coretronic

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coretronic are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Coretronic showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vanguard International and Coretronic

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

The idea behind Vanguard International Semiconductor and Coretronic 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.