Correlation Between Vanguard Consumer and Vanguard Consumer

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

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

Diversification Opportunities for Vanguard Consumer and Vanguard Consumer

-0.17

Correlation Coefficient

Vanguard Consumer  Vanguard Consumer

Good diversification

The 3 months correlation between Vanguard and Vanguard is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Consumer Staples and Vanguard Consumer Discretionar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Consumer and Vanguard Consumer 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 Consumer Staples are associated (or correlated) with Vanguard Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Consumer has no effect on the direction of Vanguard Consumer i.e., Vanguard Consumer and Vanguard Consumer go up and down completely randomly.

Pair Corralation between Vanguard Consumer and Vanguard Consumer

Considering the 90-day investment horizon Vanguard Consumer Staples is expected to generate 0.59 times more return on investment than Vanguard Consumer. However, Vanguard Consumer Staples is 1.68 times less risky than Vanguard Consumer. It trades about 0.05 of its potential returns per unit of risk. Vanguard Consumer Discretionary is currently generating about -0.15 per unit of risk. If you would invest  20,981  in Vanguard Consumer Staples on December 30, 2024 and sell it today you would earn a total of  572.00  from holding Vanguard Consumer Staples or generate 2.73% return on investment over 90 days.

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

Vanguard Consumer Staples  vs.  Vanguard Consumer Discretionar

Vanguard Consumer Staples

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Consumer Staples are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Vanguard Consumer is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Vanguard Consumer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Consumer Discretionary has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Etf's fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.

Pair Trading with Vanguard Consumer and Vanguard Consumer

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

The idea behind Vanguard Consumer Staples and Vanguard Consumer Discretionary 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.