Correlation Between Aquagold International and Vanguard Primecap

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

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

Diversification Opportunities for Aquagold International and Vanguard Primecap

0.69

Correlation Coefficient

Aquagold International  Vanguard Primecap

Poor diversification

The 3 months correlation between Aquagold and Vanguard is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Vanguard Primecap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Primecap and Aquagold 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 Aquagold International are associated (or correlated) with Vanguard Primecap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Primecap has no effect on the direction of Aquagold International i.e., Aquagold International and Vanguard Primecap go up and down completely randomly.

Pair Corralation between Aquagold International and Vanguard Primecap

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Vanguard Primecap. In addition to that, Aquagold International is 7.22 times more volatile than Vanguard Primecap Fund. It trades about -0.06 of its total potential returns per unit of risk. Vanguard Primecap Fund is currently generating about 0.05 per unit of volatility. If you would invest  14,046  in Vanguard Primecap Fund on October 6, 2024 and sell it today you would earn a total of  2,172  from holding Vanguard Primecap Fund or generate 15.46% return on investment over 90 days.

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

Aquagold International  vs.  Vanguard Primecap Fund

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Vanguard Primecap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Primecap Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Aquagold International and Vanguard Primecap

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

The idea behind Aquagold International and Vanguard Primecap Fund 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.