Correlation Between Absolute Core and Vanguard Growth

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Absolute Core and Vanguard Growth 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 Absolute Core and Vanguard Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Core Strategy and Vanguard Growth Index, you can compare the effects of market volatilities on Absolute Core and Vanguard Growth 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 Absolute Core with a short position of Vanguard Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Core and Vanguard Growth.

Diversification Opportunities for Absolute Core and Vanguard Growth

0.2
  Correlation Coefficient

Modest diversification

The 3 months correlation between Absolute and Vanguard is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Core Strategy and Vanguard Growth Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Growth Index and Absolute Core 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 Absolute Core Strategy are associated (or correlated) with Vanguard Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Growth Index has no effect on the direction of Absolute Core i.e., Absolute Core and Vanguard Growth go up and down completely randomly.

Pair Corralation between Absolute Core and Vanguard Growth

Given the investment horizon of 90 days Absolute Core Strategy is expected to under-perform the Vanguard Growth. But the etf apears to be less risky and, when comparing its historical volatility, Absolute Core Strategy is 1.83 times less risky than Vanguard Growth. The etf trades about -0.1 of its potential returns per unit of risk. The Vanguard Growth Index is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest  39,964  in Vanguard Growth Index on September 19, 2024 and sell it today you would earn a total of  2,729  from holding Vanguard Growth Index or generate 6.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Absolute Core Strategy  vs.  Vanguard Growth Index

 Performance 
       Timeline  
Absolute Core Strategy 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Absolute Core Strategy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Absolute Core is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
Vanguard Growth Index 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Growth Index are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Vanguard Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Absolute Core and Vanguard Growth Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Absolute Core and Vanguard Growth

The main advantage of trading using opposite Absolute Core and Vanguard Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Core position performs unexpectedly, Vanguard Growth 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 Growth will offset losses from the drop in Vanguard Growth's long position.
The idea behind Absolute Core Strategy and Vanguard Growth Index 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.
Check out your portfolio center.
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

Other Complementary Tools

Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
FinTech Suite
Use AI to screen and filter profitable investment opportunities
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities