Correlation Between Vanguard Core and Sitka Gold

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

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

Diversification Opportunities for Vanguard Core and Sitka Gold

-0.52

Correlation Coefficient

Vanguard Core  Sitka Gold

Excellent diversification

The 3 months correlation between Vanguard and Sitka is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard E Bond and Sitka Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sitka Gold Corp and Vanguard Core 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 E Bond are associated (or correlated) with Sitka Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sitka Gold Corp has no effect on the direction of Vanguard Core i.e., Vanguard Core and Sitka Gold go up and down completely randomly.

Pair Corralation between Vanguard Core and Sitka Gold

Assuming the 90 days horizon Vanguard E Bond is expected to under-perform the Sitka Gold. But the mutual fund apears to be less risky and, when comparing its historical volatility, Vanguard E Bond is 24.08 times less risky than Sitka Gold. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Sitka Gold Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  19.00  in Sitka Gold Corp on September 10, 2024 and sell it today you would earn a total of  8.00  from holding Sitka Gold Corp or generate 42.11% return on investment over 90 days.

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

Vanguard E Bond  vs.  Sitka Gold Corp

Vanguard E Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard E Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Vanguard Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sitka Gold Corp

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sitka Gold Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, Sitka Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vanguard Core and Sitka Gold

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

The idea behind Vanguard E Bond and Sitka Gold Corp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.