Correlation Between IA Clarington and Vanguard Growth

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

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

Diversification Opportunities for IA Clarington and Vanguard Growth

0.85

Correlation Coefficient

IA Clarington  Vanguard Growth

Very poor diversification

The 3 months correlation between IGAF and Vanguard is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding IA Clarington Loomis and Vanguard Growth Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Growth Portfolio and IA Clarington 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 IA Clarington Loomis are associated (or correlated) with Vanguard Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Growth Portfolio has no effect on the direction of IA Clarington i.e., IA Clarington and Vanguard Growth go up and down completely randomly.

Pair Corralation between IA Clarington and Vanguard Growth

Assuming the 90 days trading horizon IA Clarington Loomis is expected to under-perform the Vanguard Growth. In addition to that, IA Clarington is 1.23 times more volatile than Vanguard Growth Portfolio. It trades about -0.05 of its total potential returns per unit of risk. Vanguard Growth Portfolio is currently generating about -0.01 per unit of volatility. If you would invest  3,746  in Vanguard Growth Portfolio on December 30, 2024 and sell it today you would lose (22.00) from holding Vanguard Growth Portfolio or give up 0.59% of portfolio value over 90 days.

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

IA Clarington Loomis  vs.  Vanguard Growth Portfolio

IA Clarington Loomis

Risk-Adjusted Performance

Very Weak

Over the last 90 days IA Clarington Loomis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IA Clarington is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Vanguard Growth Portfolio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Growth Portfolio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Vanguard Growth is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IA Clarington and Vanguard Growth

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

The idea behind IA Clarington Loomis and Vanguard Growth Portfolio 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.