Correlation Between Vanguard Total and Logan Circle

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

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

Diversification Opportunities for Vanguard Total and Logan Circle

0.95

Correlation Coefficient

Vanguard Total  Logan Circle

Almost no diversification

The 3 months correlation between Vanguard and Logan is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond and Logan Circle Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logan Circle Partners and Vanguard Total 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 Total Bond are associated (or correlated) with Logan Circle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logan Circle Partners has no effect on the direction of Vanguard Total i.e., Vanguard Total and Logan Circle go up and down completely randomly.

Pair Corralation between Vanguard Total and Logan Circle

Assuming the 90 days horizon Vanguard Total Bond is expected to generate 0.97 times more return on investment than Logan Circle. However, Vanguard Total Bond is 1.03 times less risky than Logan Circle. It trades about 0.16 of its potential returns per unit of risk. Logan Circle Partners is currently generating about 0.15 per unit of risk. If you would invest  938.00  in Vanguard Total Bond on December 22, 2024 and sell it today you would earn a total of  27.00  from holding Vanguard Total Bond or generate 2.88% return on investment over 90 days.

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

Vanguard Total Bond  vs.  Logan Circle Partners

Vanguard Total Bond

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Bond are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Vanguard Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Logan Circle Partners

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Logan Circle Partners are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Logan Circle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Total and Logan Circle

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

The idea behind Vanguard Total Bond and Logan Circle Partners 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.