Correlation Between Vanguard Health and Vanguard Sumer

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

Diversification Opportunities for Vanguard Health and Vanguard Sumer

0.22

Correlation Coefficient

Vanguard Health  Vanguard Sumer

Modest diversification

The 3 months correlation between Vanguard and Vanguard is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Health Care and Vanguard Sumer Staples in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Sumer Staples 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 Vanguard Sumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Sumer Staples has no effect on the direction of Vanguard Health i.e., Vanguard Health and Vanguard Sumer go up and down completely randomly.

Pair Corralation between Vanguard Health and Vanguard Sumer

Assuming the 90 days horizon Vanguard Health Care is expected to under-perform the Vanguard Sumer. In addition to that, Vanguard Health is 1.23 times more volatile than Vanguard Sumer Staples. It trades about -0.11 of its total potential returns per unit of risk. Vanguard Sumer Staples is currently generating about 0.08 per unit of volatility. If you would invest  10,720  in Vanguard Sumer Staples on September 3, 2024 and sell it today you would earn a total of  311.00  from holding Vanguard Sumer Staples or generate 2.9% return on investment over 90 days.

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

Vanguard Health Care  vs.  Vanguard Sumer Staples

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 fairly strong forward indicators, Vanguard Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Sumer Staples

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Sumer Staples are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Sumer 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 Vanguard Sumer

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

The idea behind Vanguard Health Care and Vanguard Sumer Staples 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.