Correlation Between GAMING FAC and Vanguard Funds

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

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

Diversification Opportunities for GAMING FAC and Vanguard Funds

0.26

Correlation Coefficient

GAMING FAC  Vanguard Funds

Modest diversification

The 3 months correlation between GAMING and Vanguard is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding GAMING FAC SA 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 GAMING FAC 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 GAMING FAC SA 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 GAMING FAC i.e., GAMING FAC and Vanguard Funds go up and down completely randomly.

Pair Corralation between GAMING FAC and Vanguard Funds

Assuming the 90 days horizon GAMING FAC SA is expected to under-perform the Vanguard Funds. In addition to that, GAMING FAC is 3.14 times more volatile than Vanguard Funds Public. It trades about -0.21 of its total potential returns per unit of risk. Vanguard Funds Public is currently generating about -0.59 per unit of volatility. If you would invest  11,151  in Vanguard Funds Public on December 10, 2024 and sell it today you would lose (1,088) from holding Vanguard Funds Public or give up 9.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

GAMING FAC SA  vs.  Vanguard Funds Public

GAMING FAC SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GAMING FAC SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, GAMING FAC reported solid returns over the last few months and may actually be approaching a breakup point.

Vanguard Funds Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Funds Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Pair Trading with GAMING FAC and Vanguard Funds

The main advantage of trading using opposite GAMING FAC and Vanguard Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GAMING FAC 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 GAMING FAC SA 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.