Correlation Between GDEF and Vanguard Total

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

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

Diversification Opportunities for GDEF and Vanguard Total

0.0

Correlation Coefficient

GDEF  Vanguard Total

Pay attention - limited upside

The 3 months correlation between GDEF and Vanguard is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GDEF and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock and GDEF 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 GDEF are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of GDEF i.e., GDEF and Vanguard Total go up and down completely randomly.

Pair Corralation between GDEF and Vanguard Total

If you would invest (100.00) in GDEF on December 28, 2024 and sell it today you would earn a total of  100.00  from holding GDEF or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

GDEF  vs.  Vanguard Total Stock

GDEF

Risk-Adjusted Performance

Very Weak

Over the last 90 days GDEF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, GDEF is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Vanguard Total Stock

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Total Stock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Vanguard Total is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with GDEF and Vanguard Total

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

The idea behind GDEF and Vanguard Total Stock 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.