Correlation Between Mairs Power and Vanguard Short-term

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

By analyzing existing cross correlation between Mairs Power Growth and Vanguard Short Term Government, you can compare the effects of market volatilities on Mairs Power and Vanguard Short-term 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 Mairs Power with a short position of Vanguard Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mairs Power and Vanguard Short-term.

Diversification Opportunities for Mairs Power and Vanguard Short-term

-0.35

Correlation Coefficient

Mairs Power  Vanguard Short-term

Very good diversification

The 3 months correlation between Mairs and Vanguard is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Mairs Power Growth and Vanguard Short Term Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Short Term and Mairs Power 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 Mairs Power Growth are associated (or correlated) with Vanguard Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Short Term has no effect on the direction of Mairs Power i.e., Mairs Power and Vanguard Short-term go up and down completely randomly.

Pair Corralation between Mairs Power and Vanguard Short-term

Assuming the 90 days horizon Mairs Power Growth is expected to generate 11.5 times more return on investment than Vanguard Short-term. However, Mairs Power is 11.5 times more volatile than Vanguard Short Term Government. It trades about 0.12 of its potential returns per unit of risk. Vanguard Short Term Government is currently generating about 0.29 per unit of risk. If you would invest  17,352  in Mairs Power Growth on October 25, 2024 and sell it today you would earn a total of  353.00  from holding Mairs Power Growth or generate 2.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Mairs Power Growth  vs.  Vanguard Short Term Government

Mairs Power Growth

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mairs Power Growth are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Mairs Power is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Short Term

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Short Term Government are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Vanguard Short-term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mairs Power and Vanguard Short-term

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

The idea behind Mairs Power Growth and Vanguard Short Term Government 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.