Correlation Between Vanguard Balanced and IA Clarington

Can any of the company-specific risk be diversified away by investing in both Vanguard Balanced and IA Clarington 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 IA Clarington 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 IA Clarington Loomis, you can compare the effects of market volatilities on Vanguard Balanced and IA Clarington 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 IA Clarington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Balanced and IA Clarington.

Diversification Opportunities for Vanguard Balanced and IA Clarington

0.78

Correlation Coefficient

Vanguard Balanced  IA Clarington

Poor diversification

The 3 months correlation between Vanguard and IGAF is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Balanced Portfolio and IA Clarington Loomis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IA Clarington Loomis 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 IA Clarington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IA Clarington Loomis has no effect on the direction of Vanguard Balanced i.e., Vanguard Balanced and IA Clarington go up and down completely randomly.

Pair Corralation between Vanguard Balanced and IA Clarington

Assuming the 90 days trading horizon Vanguard Balanced is expected to generate 1.2 times less return on investment than IA Clarington. But when comparing it to its historical volatility, Vanguard Balanced Portfolio is 1.67 times less risky than IA Clarington. It trades about 0.09 of its potential returns per unit of risk. IA Clarington Loomis is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,514  in IA Clarington Loomis on October 6, 2024 and sell it today you would earn a total of  31.00  from holding IA Clarington Loomis or generate 2.05% return on investment over 90 days.

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

Vanguard Balanced Portfolio  vs.  IA Clarington Loomis

Vanguard Balanced

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Balanced Portfolio are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Vanguard Balanced is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

IA Clarington Loomis

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in IA Clarington Loomis are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Vanguard Balanced and IA Clarington

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

The idea behind Vanguard Balanced Portfolio and IA Clarington Loomis 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 CEOs Directory module to screen CEOs from public companies around the world.