Correlation Between Vanguard Dividend and Aptus Large

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

By analyzing existing cross correlation between Vanguard Dividend Appreciation and Aptus Large Cap, you can compare the effects of market volatilities on Vanguard Dividend and Aptus Large 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 Dividend with a short position of Aptus Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Dividend and Aptus Large.

Diversification Opportunities for Vanguard Dividend and Aptus Large

0.94

Correlation Coefficient

Vanguard Dividend  Aptus Large

Almost no diversification

The 3 months correlation between Vanguard and Aptus is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Dividend Appreciation and Aptus Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptus Large Cap and Vanguard Dividend 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 Dividend Appreciation are associated (or correlated) with Aptus Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptus Large Cap has no effect on the direction of Vanguard Dividend i.e., Vanguard Dividend and Aptus Large go up and down completely randomly.

Pair Corralation between Vanguard Dividend and Aptus Large

Considering the 90-day investment horizon Vanguard Dividend is expected to generate 1.45 times less return on investment than Aptus Large. But when comparing it to its historical volatility, Vanguard Dividend Appreciation is 1.02 times less risky than Aptus Large. It trades about 0.15 of its potential returns per unit of risk. Aptus Large Cap is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  3,049  in Aptus Large Cap on September 1, 2024 and sell it today you would earn a total of  282.00  from holding Aptus Large Cap or generate 9.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Vanguard Dividend Appreciation  vs.  Aptus Large Cap

Vanguard Dividend

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Dividend Appreciation are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Vanguard Dividend is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Aptus Large Cap

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aptus Large Cap are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent fundamental drivers, Aptus Large may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Vanguard Dividend and Aptus Large

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

The idea behind Vanguard Dividend Appreciation and Aptus Large Cap 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.

Check out your portfolio center.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.