Correlation Between Vanguard Balanced and Mackenzie Balanced

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

Diversification Opportunities for Vanguard Balanced and Mackenzie Balanced

0.97

Correlation Coefficient

Vanguard Balanced  Mackenzie Balanced

Almost no diversification

The 3 months correlation between Vanguard and Mackenzie is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Balanced Portfolio and Mackenzie Balanced Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie Balanced 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 Mackenzie Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie Balanced has no effect on the direction of Vanguard Balanced i.e., Vanguard Balanced and Mackenzie Balanced go up and down completely randomly.

Pair Corralation between Vanguard Balanced and Mackenzie Balanced

Assuming the 90 days trading horizon Vanguard Balanced Portfolio is expected to generate 0.72 times more return on investment than Mackenzie Balanced. However, Vanguard Balanced Portfolio is 1.39 times less risky than Mackenzie Balanced. It trades about 0.33 of its potential returns per unit of risk. Mackenzie Balanced Allocation is currently generating about 0.23 per unit of risk. If you would invest  3,162  in Vanguard Balanced Portfolio on September 5, 2024 and sell it today you would earn a total of  230.00  from holding Vanguard Balanced Portfolio or generate 7.27% return on investment over 90 days.

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

Vanguard Balanced Portfolio  vs.  Mackenzie Balanced Allocation

Vanguard Balanced

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Balanced Portfolio are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vanguard Balanced may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Mackenzie Balanced

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mackenzie Balanced Allocation are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Mackenzie Balanced may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vanguard Balanced and Mackenzie Balanced

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

The idea behind Vanguard Balanced Portfolio and Mackenzie Balanced Allocation 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .