Correlation Between Vanguard All and Blockchain Technologies

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

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

Diversification Opportunities for Vanguard All and Blockchain Technologies

0.89

Correlation Coefficient

Vanguard All  Blockchain Technologies

Very poor diversification

The 3 months correlation between Vanguard and Blockchain is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard All Equity ETF and Blockchain Technologies ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blockchain Technologies and Vanguard All 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 All Equity ETF are associated (or correlated) with Blockchain Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blockchain Technologies has no effect on the direction of Vanguard All i.e., Vanguard All and Blockchain Technologies go up and down completely randomly.

Pair Corralation between Vanguard All and Blockchain Technologies

Assuming the 90 days trading horizon Vanguard All is expected to generate 4.37 times less return on investment than Blockchain Technologies. But when comparing it to its historical volatility, Vanguard All Equity ETF is 5.47 times less risky than Blockchain Technologies. It trades about 0.13 of its potential returns per unit of risk. Blockchain Technologies ETF is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,718  in Blockchain Technologies ETF on October 23, 2024 and sell it today you would earn a total of  356.00  from holding Blockchain Technologies ETF or generate 20.72% return on investment over 90 days.

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

Vanguard All Equity ETF  vs.  Blockchain Technologies ETF

Vanguard All Equity

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard All Equity ETF are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Vanguard All is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Blockchain Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blockchain Technologies ETF are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Blockchain Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vanguard All and Blockchain Technologies

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

The idea behind Vanguard All Equity ETF and Blockchain Technologies ETF 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.