Correlation Between Saba Capital and Vanguard Total

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

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

Diversification Opportunities for Saba Capital and Vanguard Total

0.86

Correlation Coefficient

Saba Capital  Vanguard Total

Very poor diversification

The 3 months correlation between Saba and Vanguard is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Saba Capital Income 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 Saba Capital 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 Saba Capital Income 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 Saba Capital i.e., Saba Capital and Vanguard Total go up and down completely randomly.

Pair Corralation between Saba Capital and Vanguard Total

Given the investment horizon of 90 days Saba Capital Income is expected to generate 1.53 times more return on investment than Vanguard Total. However, Saba Capital is 1.53 times more volatile than Vanguard Total Stock. It trades about -0.04 of its potential returns per unit of risk. Vanguard Total Stock is currently generating about -0.09 per unit of risk. If you would invest  893.00  in Saba Capital Income on October 1, 2024 and sell it today you would lose (13.00) from holding Saba Capital Income or give up 1.46% of portfolio value over 90 days.

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

Saba Capital Income  vs.  Vanguard Total Stock

Saba Capital Income

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Saba Capital Income are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Saba Capital is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Total Stock

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. 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 Saba Capital and Vanguard Total

The main advantage of trading using opposite Saba Capital and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saba Capital 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 Saba Capital Income 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.