Correlation Between Vy T and International Equity

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

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

Diversification Opportunities for Vy T and International Equity

-0.67

Correlation Coefficient

Vy T  International Equity

Excellent diversification

The 3 months correlation between IAXTX and International is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Vy T Rowe and International Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Equity and Vy T 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 Vy T Rowe are associated (or correlated) with International Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Equity has no effect on the direction of Vy T i.e., Vy T and International Equity go up and down completely randomly.

Pair Corralation between Vy T and International Equity

Assuming the 90 days horizon Vy T Rowe is expected to generate 1.67 times more return on investment than International Equity. However, Vy T is 1.67 times more volatile than International Equity Fund. It trades about 0.04 of its potential returns per unit of risk. International Equity Fund is currently generating about -0.01 per unit of risk. If you would invest  816.00  in Vy T Rowe on October 7, 2024 and sell it today you would earn a total of  83.00  from holding Vy T Rowe or generate 10.17% return on investment over 90 days.

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

Vy T Rowe  vs.  International Equity Fund

Vy T Rowe

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vy T Rowe are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vy T may actually be approaching a critical reversion point that can send shares even higher in February 2025.

International Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Equity Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Vy T and International Equity

The main advantage of trading using opposite Vy T and International Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vy T position performs unexpectedly, International Equity 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 International Equity will offset losses from the drop in International Equity's long position.

The idea behind Vy T Rowe and International Equity 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.