Correlation Between Vanguard Explorer and Aston Martin

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

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

Diversification Opportunities for Vanguard Explorer and Aston Martin

0.35

Correlation Coefficient

Vanguard Explorer  Aston Martin

Weak diversification

The 3 months correlation between Vanguard and Aston is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Explorer Fund and Aston Martin Lagonda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Martin Lagonda and Vanguard Explorer 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 Explorer Fund are associated (or correlated) with Aston Martin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Martin Lagonda has no effect on the direction of Vanguard Explorer i.e., Vanguard Explorer and Aston Martin go up and down completely randomly.

Pair Corralation between Vanguard Explorer and Aston Martin

Assuming the 90 days horizon Vanguard Explorer Fund is expected to generate 0.48 times more return on investment than Aston Martin. However, Vanguard Explorer Fund is 2.07 times less risky than Aston Martin. It trades about 0.0 of its potential returns per unit of risk. Aston Martin Lagonda is currently generating about 0.0 per unit of risk. If you would invest  12,164  in Vanguard Explorer Fund on October 24, 2024 and sell it today you would lose (83.00) from holding Vanguard Explorer Fund or give up 0.68% of portfolio value over 90 days.

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

Vanguard Explorer Fund  vs.  Aston Martin Lagonda

Vanguard Explorer

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aston Martin Lagonda

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aston Martin Lagonda has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Aston Martin 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 Explorer and Aston Martin

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

The idea behind Vanguard Explorer Fund and Aston Martin Lagonda 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.