Correlation Between Vanguard ESG and Vanguard

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

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

Diversification Opportunities for Vanguard ESG and Vanguard

0.18

Correlation Coefficient

Vanguard ESG  Vanguard

Average diversification

The 3 months correlation between Vanguard and Vanguard is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard ESG Developed and Vanguard UK Gilt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard UK Gilt and Vanguard ESG 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 Vanguard ESG Developed are associated (or correlated) with Vanguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard UK Gilt has no effect on the direction of Vanguard ESG i.e., Vanguard ESG and Vanguard go up and down completely randomly.

Pair Corralation between Vanguard ESG and Vanguard

Assuming the 90 days trading horizon Vanguard ESG Developed is expected to generate 1.41 times more return on investment than Vanguard. However, Vanguard ESG is 1.41 times more volatile than Vanguard UK Gilt. It trades about 0.04 of its potential returns per unit of risk. Vanguard UK Gilt is currently generating about -0.03 per unit of risk. If you would invest  554.00  in Vanguard ESG Developed on October 11, 2024 and sell it today you would earn a total of  87.00  from holding Vanguard ESG Developed or generate 15.7% return on investment over 90 days.

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

Vanguard ESG Developed  vs.  Vanguard UK Gilt

Vanguard ESG Developed

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard ESG Developed are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Vanguard ESG is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Vanguard UK Gilt

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard UK Gilt has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Vanguard is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Vanguard ESG and Vanguard

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

The idea behind Vanguard ESG Developed and Vanguard UK Gilt 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.