Correlation Between Vanguard Total and STF Tactical

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

By analyzing existing cross correlation between Vanguard Total Bond and STF Tactical Growth, you can compare the effects of market volatilities on Vanguard Total and STF Tactical 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 Total with a short position of STF Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and STF Tactical.

Diversification Opportunities for Vanguard Total and STF Tactical

-0.41

Correlation Coefficient

Vanguard Total  STF Tactical

Very good diversification

The 3 months correlation between Vanguard and STF is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond and STF Tactical Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STF Tactical Growth and Vanguard Total 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 Total Bond are associated (or correlated) with STF Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STF Tactical Growth has no effect on the direction of Vanguard Total i.e., Vanguard Total and STF Tactical go up and down completely randomly.

Pair Corralation between Vanguard Total and STF Tactical

Considering the 90-day investment horizon Vanguard Total Bond is expected to under-perform the STF Tactical. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard Total Bond is 4.8 times less risky than STF Tactical. The etf trades about -0.39 of its potential returns per unit of risk. The STF Tactical Growth is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,436  in STF Tactical Growth on October 9, 2024 and sell it today you would earn a total of  34.00  from holding STF Tactical Growth or generate 1.4% return on investment over 90 days.

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

Vanguard Total Bond  vs.  STF Tactical Growth

Vanguard Total Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Total Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Vanguard Total is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

STF Tactical Growth

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in STF Tactical Growth are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent technical and fundamental indicators, STF Tactical may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Vanguard Total and STF Tactical

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

The idea behind Vanguard Total Bond and STF Tactical Growth 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.