Correlation Between Vanguard Explorer and Sextant Growth

Can any of the company-specific risk be diversified away by investing in both Vanguard Explorer and Sextant Growth 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 Sextant Growth 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 Sextant Growth Fund, you can compare the effects of market volatilities on Vanguard Explorer and Sextant Growth 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 Sextant Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Explorer and Sextant Growth.

Diversification Opportunities for Vanguard Explorer and Sextant Growth

0.91

Correlation Coefficient

Vanguard Explorer  Sextant Growth

Almost no diversification

The 3 months correlation between Vanguard and Sextant is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Explorer Fund and Sextant Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sextant Growth 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 Sextant Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sextant Growth has no effect on the direction of Vanguard Explorer i.e., Vanguard Explorer and Sextant Growth go up and down completely randomly.

Pair Corralation between Vanguard Explorer and Sextant Growth

Assuming the 90 days horizon Vanguard Explorer is expected to generate 1.12 times less return on investment than Sextant Growth. In addition to that, Vanguard Explorer is 1.12 times more volatile than Sextant Growth Fund. It trades about 0.14 of its total potential returns per unit of risk. Sextant Growth Fund is currently generating about 0.17 per unit of volatility. If you would invest  5,373  in Sextant Growth Fund on September 13, 2024 and sell it today you would earn a total of  507.00  from holding Sextant Growth Fund or generate 9.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Vanguard Explorer Fund  vs.  Sextant Growth Fund

Vanguard Explorer

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Explorer Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Explorer may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sextant Growth

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sextant Growth Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Sextant Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vanguard Explorer and Sextant Growth

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

The idea behind Vanguard Explorer Fund and Sextant Growth Fund 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.