Correlation Between Vanguard Health and Six Circles

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

By analyzing existing cross correlation between Vanguard Health Care and Six Circles Ultra, you can compare the effects of market volatilities on Vanguard Health and Six Circles 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 Health with a short position of Six Circles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Health and Six Circles.

Diversification Opportunities for Vanguard Health and Six Circles

-0.92

Correlation Coefficient

Vanguard Health  Six Circles

Pay attention - limited upside

The 3 months correlation between Vanguard and Six is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Health Care and Six Circles Ultra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Six Circles Ultra and Vanguard Health 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 Health Care are associated (or correlated) with Six Circles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Six Circles Ultra has no effect on the direction of Vanguard Health i.e., Vanguard Health and Six Circles go up and down completely randomly.

Pair Corralation between Vanguard Health and Six Circles

Assuming the 90 days horizon Vanguard Health Care is expected to under-perform the Six Circles. In addition to that, Vanguard Health is 13.04 times more volatile than Six Circles Ultra. It trades about -0.04 of its total potential returns per unit of risk. Six Circles Ultra is currently generating about 0.35 per unit of volatility. If you would invest  973.00  in Six Circles Ultra on September 15, 2024 and sell it today you would earn a total of  26.00  from holding Six Circles Ultra or generate 2.67% return on investment over 90 days.

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

Vanguard Health Care  vs.  Six Circles Ultra

Vanguard Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Health Care has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Six Circles Ultra

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Six Circles Ultra are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Six Circles 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 Health and Six Circles

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

The idea behind Vanguard Health Care and Six Circles Ultra 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.