Correlation Between Vanguard Balanced and CI Global

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

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

Diversification Opportunities for Vanguard Balanced and CI Global

0.86

Correlation Coefficient

Vanguard Balanced  CI Global

Very poor diversification

The 3 months correlation between Vanguard and CGAA is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Balanced Portfolio and CI Global Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Global Asset and Vanguard Balanced 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 Balanced Portfolio are associated (or correlated) with CI Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Global Asset has no effect on the direction of Vanguard Balanced i.e., Vanguard Balanced and CI Global go up and down completely randomly.

Pair Corralation between Vanguard Balanced and CI Global

Assuming the 90 days trading horizon Vanguard Balanced Portfolio is expected to generate 0.8 times more return on investment than CI Global. However, Vanguard Balanced Portfolio is 1.25 times less risky than CI Global. It trades about 0.0 of its potential returns per unit of risk. CI Global Asset is currently generating about -0.03 per unit of risk. If you would invest  3,323  in Vanguard Balanced Portfolio on December 30, 2024 and sell it today you would lose (3.00) from holding Vanguard Balanced Portfolio or give up 0.09% of portfolio value over 90 days.

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

Vanguard Balanced Portfolio  vs.  CI Global Asset

Vanguard Balanced

Risk-Adjusted Performance

Very Weak

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

CI Global Asset

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Vanguard Balanced and CI Global

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

The idea behind Vanguard Balanced Portfolio and CI Global Asset 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.