Correlation Between Guardian and Vanguard Global

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

By analyzing existing cross correlation between Guardian i3 Global and Vanguard Global Momentum, you can compare the effects of market volatilities on Guardian and Vanguard Global 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 Guardian with a short position of Vanguard Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardian and Vanguard Global.

Diversification Opportunities for Guardian and Vanguard Global

0.78

Correlation Coefficient

Guardian  Vanguard Global

Poor diversification

The 3 months correlation between Guardian and Vanguard is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Guardian i3 Global and Vanguard Global Momentum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Global Momentum and Guardian 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 Guardian i3 Global are associated (or correlated) with Vanguard Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Global Momentum has no effect on the direction of Guardian i.e., Guardian and Vanguard Global go up and down completely randomly.

Pair Corralation between Guardian and Vanguard Global

Assuming the 90 days trading horizon Guardian i3 Global is expected to generate 1.07 times more return on investment than Vanguard Global. However, Guardian is 1.07 times more volatile than Vanguard Global Momentum. It trades about 0.12 of its potential returns per unit of risk. Vanguard Global Momentum is currently generating about 0.1 per unit of risk. If you would invest  1,734  in Guardian i3 Global on September 22, 2024 and sell it today you would earn a total of  1,284  from holding Guardian i3 Global or generate 74.05% return on investment over 90 days.

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

Guardian i3 Global  vs.  Vanguard Global Momentum

Guardian i3 Global

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian i3 Global are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Guardian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Vanguard Global Momentum

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Global Momentum are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vanguard Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Guardian and Vanguard Global

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

The idea behind Guardian i3 Global and Vanguard Global Momentum 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.