Correlation Between Gemfields Group and Vanguard Funds

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

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

Diversification Opportunities for Gemfields Group and Vanguard Funds

-0.85

Correlation Coefficient

Gemfields Group  Vanguard Funds

Pay attention - limited upside

The 3 months correlation between Gemfields and Vanguard is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Gemfields Group Limited and Vanguard Funds Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Funds Public and Gemfields Group 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 Gemfields Group Limited are associated (or correlated) with Vanguard Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Funds Public has no effect on the direction of Gemfields Group i.e., Gemfields Group and Vanguard Funds go up and down completely randomly.

Pair Corralation between Gemfields Group and Vanguard Funds

Assuming the 90 days horizon Gemfields Group Limited is expected to under-perform the Vanguard Funds. In addition to that, Gemfields Group is 6.59 times more volatile than Vanguard Funds Public. It trades about -0.11 of its total potential returns per unit of risk. Vanguard Funds Public is currently generating about 0.19 per unit of volatility. If you would invest  9,870  in Vanguard Funds Public on October 6, 2024 and sell it today you would earn a total of  1,062  from holding Vanguard Funds Public or generate 10.76% return on investment over 90 days.

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

Gemfields Group Limited  vs.  Vanguard Funds Public

Gemfields Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gemfields Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Vanguard Funds Public

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Funds Public are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Vanguard Funds may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Gemfields Group and Vanguard Funds

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

The idea behind Gemfields Group Limited and Vanguard Funds Public 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.