Correlation Between Vanguard International and Grand Ocean

Can any of the company-specific risk be diversified away by investing in both Vanguard International and Grand Ocean 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 Grand Ocean 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 Grand Ocean Retail, you can compare the effects of market volatilities on Vanguard International and Grand Ocean 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 Grand Ocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard International and Grand Ocean.

Diversification Opportunities for Vanguard International and Grand Ocean

-0.56

Correlation Coefficient

Vanguard International  Grand Ocean

Excellent diversification

The 3 months correlation between Vanguard and Grand is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard International Semicon and Grand Ocean Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Ocean Retail 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 Grand Ocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Ocean Retail has no effect on the direction of Vanguard International i.e., Vanguard International and Grand Ocean go up and down completely randomly.

Pair Corralation between Vanguard International and Grand Ocean

Assuming the 90 days trading horizon Vanguard International Semiconductor is expected to under-perform the Grand Ocean. But the stock apears to be less risky and, when comparing its historical volatility, Vanguard International Semiconductor is 2.59 times less risky than Grand Ocean. The stock trades about -0.12 of its potential returns per unit of risk. The Grand Ocean Retail is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  838.00  in Grand Ocean Retail on September 13, 2024 and sell it today you would earn a total of  432.00  from holding Grand Ocean Retail or generate 51.55% return on investment over 90 days.

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

Vanguard International Semicon  vs.  Grand Ocean Retail

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 abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Grand Ocean Retail

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grand Ocean Retail are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Grand Ocean showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vanguard International and Grand Ocean

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

The idea behind Vanguard International Semiconductor and Grand Ocean Retail 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.