Correlation Between Vy Goldman and Wanger International

Can any of the company-specific risk be diversified away by investing in both Vy Goldman and Wanger International 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 Vy Goldman and Wanger International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vy Goldman Sachs and Wanger International Wanger, you can compare the effects of market volatilities on Vy Goldman and Wanger International 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 Vy Goldman with a short position of Wanger International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vy Goldman and Wanger International.

Diversification Opportunities for Vy Goldman and Wanger International

0.85

Correlation Coefficient

Vy Goldman  Wanger International

Very poor diversification

The 3 months correlation between VGSBX and Wanger is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Vy Goldman Sachs and Wanger International Wanger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wanger International and Vy Goldman 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 Vy Goldman Sachs are associated (or correlated) with Wanger International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wanger International has no effect on the direction of Vy Goldman i.e., Vy Goldman and Wanger International go up and down completely randomly.

Pair Corralation between Vy Goldman and Wanger International

Assuming the 90 days horizon Vy Goldman is expected to generate 1.82 times less return on investment than Wanger International. But when comparing it to its historical volatility, Vy Goldman Sachs is 1.54 times less risky than Wanger International. It trades about 0.02 of its potential returns per unit of risk. Wanger International Wanger is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,736  in Wanger International Wanger on September 26, 2024 and sell it today you would earn a total of  124.00  from holding Wanger International Wanger or generate 7.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Vy Goldman Sachs  vs.  Wanger International Wanger

Vy Goldman Sachs

Risk-Adjusted Performance

0 of 100

Very Weak

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

Wanger International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wanger International Wanger has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Vy Goldman and Wanger International

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

The idea behind Vy Goldman Sachs and Wanger International Wanger 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.