Correlation Between Vanguard Growth and First Asset

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

By analyzing existing cross correlation between Vanguard Growth Portfolio and First Asset Tech, you can compare the effects of market volatilities on Vanguard Growth and First Asset 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 Growth with a short position of First Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Growth and First Asset.

Diversification Opportunities for Vanguard Growth and First Asset

0.63

Correlation Coefficient

Vanguard Growth  First Asset

Poor diversification

The 3 months correlation between Vanguard and First is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Portfolio and First Asset Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Asset Tech and Vanguard Growth 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 Growth Portfolio are associated (or correlated) with First Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Asset Tech has no effect on the direction of Vanguard Growth i.e., Vanguard Growth and First Asset go up and down completely randomly.

Pair Corralation between Vanguard Growth and First Asset

Assuming the 90 days trading horizon Vanguard Growth is expected to generate 2.19 times less return on investment than First Asset. But when comparing it to its historical volatility, Vanguard Growth Portfolio is 2.47 times less risky than First Asset. It trades about 0.11 of its potential returns per unit of risk. First Asset Tech is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,176  in First Asset Tech on October 5, 2024 and sell it today you would earn a total of  917.00  from holding First Asset Tech or generate 77.98% return on investment over 90 days.

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

Vanguard Growth Portfolio  vs.  First Asset Tech

Vanguard Growth Portfolio

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Growth Portfolio are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Vanguard Growth is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

First Asset Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Asset Tech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, First Asset 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 Growth and First Asset

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

The idea behind Vanguard Growth Portfolio and First Asset Tech 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.