Correlation Between Vanguard All and Mackenzie Balanced

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

Diversification Opportunities for Vanguard All and Mackenzie Balanced

0.91

Correlation Coefficient

Vanguard All  Mackenzie Balanced

Almost no diversification

The 3 months correlation between Vanguard and Mackenzie is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard All Equity ETF 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 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 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 All i.e., Vanguard All and Mackenzie Balanced go up and down completely randomly.

Pair Corralation between Vanguard All and Mackenzie Balanced

Assuming the 90 days trading horizon Vanguard All Equity ETF is expected to generate 1.16 times more return on investment than Mackenzie Balanced. However, Vanguard All is 1.16 times more volatile than Mackenzie Balanced Allocation. It trades about 0.04 of its potential returns per unit of risk. Mackenzie Balanced Allocation is currently generating about 0.03 per unit of risk. If you would invest  4,605  in Vanguard All Equity ETF on December 2, 2024 and sell it today you would earn a total of  65.00  from holding Vanguard All Equity ETF or generate 1.41% return on investment over 90 days.

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

Vanguard All Equity ETF  vs.  Mackenzie Balanced Allocation

Vanguard All Equity

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard All Equity ETF are ranked lower than 2 (%) 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.

Mackenzie Balanced

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mackenzie Balanced Allocation are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Mackenzie Balanced is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Vanguard All and Mackenzie Balanced

The main advantage of trading using opposite Vanguard All and Mackenzie Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard All 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 All Equity ETF 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.