Correlation Between Vanguard Growth and Polen Us

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

By analyzing existing cross correlation between Vanguard Growth Index and Polen Small Pany, you can compare the effects of market volatilities on Vanguard Growth and Polen Us 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 Polen Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Growth and Polen Us.

Diversification Opportunities for Vanguard Growth and Polen Us

0.65

Correlation Coefficient

Vanguard Growth  Polen Us

Poor diversification

The 3 months correlation between Vanguard and Polen is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index and Polen Small Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polen Small Pany 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 Index are associated (or correlated) with Polen Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polen Small Pany has no effect on the direction of Vanguard Growth i.e., Vanguard Growth and Polen Us go up and down completely randomly.

Pair Corralation between Vanguard Growth and Polen Us

Assuming the 90 days horizon Vanguard Growth Index is expected to generate 0.92 times more return on investment than Polen Us. However, Vanguard Growth Index is 1.09 times less risky than Polen Us. It trades about 0.12 of its potential returns per unit of risk. Polen Small Pany is currently generating about 0.06 per unit of risk. If you would invest  18,623  in Vanguard Growth Index on October 25, 2024 and sell it today you would earn a total of  3,233  from holding Vanguard Growth Index or generate 17.36% return on investment over 90 days.

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

Vanguard Growth Index  vs.  Polen Small Pany

Vanguard Growth Index

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Growth Index are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Growth may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Polen Small Pany

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Polen Small Pany are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Polen Us may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Vanguard Growth and Polen Us

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

The idea behind Vanguard Growth Index and Polen Small Pany 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.