Correlation Between Vanguard 500 and XIAOMI

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Can any of the company-specific risk be diversified away by investing in both Vanguard 500 and XIAOMI 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 500 and XIAOMI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard 500 Index and XIAOMI 3375 29 APR 30, you can compare the effects of market volatilities on Vanguard 500 and XIAOMI 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 500 with a short position of XIAOMI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and XIAOMI.

Diversification Opportunities for Vanguard 500 and XIAOMI

0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between Vanguard and XIAOMI is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index and XIAOMI 3375 29 APR 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XIAOMI 3375 29 and Vanguard 500 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 500 Index are associated (or correlated) with XIAOMI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XIAOMI 3375 29 has no effect on the direction of Vanguard 500 i.e., Vanguard 500 and XIAOMI go up and down completely randomly.

Pair Corralation between Vanguard 500 and XIAOMI

Assuming the 90 days horizon Vanguard 500 Index is expected to under-perform the XIAOMI. In addition to that, Vanguard 500 is 2.22 times more volatile than XIAOMI 3375 29 APR 30. It trades about -0.18 of its total potential returns per unit of risk. XIAOMI 3375 29 APR 30 is currently generating about -0.35 per unit of volatility. If you would invest  9,181  in XIAOMI 3375 29 APR 30 on October 6, 2024 and sell it today you would lose (39.00) from holding XIAOMI 3375 29 APR 30 or give up 0.42% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy15.0%
ValuesDaily Returns

Vanguard 500 Index  vs.  XIAOMI 3375 29 APR 30

 Performance 
       Timeline  
Vanguard 500 Index 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard 500 Index are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard 500 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
XIAOMI 3375 29 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days XIAOMI 3375 29 APR 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for XIAOMI 3375 29 APR 30 investors.

Vanguard 500 and XIAOMI Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vanguard 500 and XIAOMI

The main advantage of trading using opposite Vanguard 500 and XIAOMI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 position performs unexpectedly, XIAOMI 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 XIAOMI will offset losses from the drop in XIAOMI's long position.
The idea behind Vanguard 500 Index and XIAOMI 3375 29 APR 30 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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