Correlation Between Vanguard Growth and Mai Managed

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

Diversification Opportunities for Vanguard Growth and Mai Managed

0.96

Correlation Coefficient

Vanguard Growth  Mai Managed

Almost no diversification

The 3 months correlation between Vanguard and Mai is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index and Mai Managed Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mai Managed Volatility 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 Mai Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mai Managed Volatility has no effect on the direction of Vanguard Growth i.e., Vanguard Growth and Mai Managed go up and down completely randomly.

Pair Corralation between Vanguard Growth and Mai Managed

Assuming the 90 days horizon Vanguard Growth Index is expected to generate 4.17 times more return on investment than Mai Managed. However, Vanguard Growth is 4.17 times more volatile than Mai Managed Volatility. It trades about 0.08 of its potential returns per unit of risk. Mai Managed Volatility is currently generating about 0.12 per unit of risk. If you would invest  19,369  in Vanguard Growth Index on September 29, 2024 and sell it today you would earn a total of  2,203  from holding Vanguard Growth Index or generate 11.37% return on investment over 90 days.

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

Vanguard Growth Index  vs.  Mai Managed Volatility

Vanguard Growth Index

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Growth Index are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Vanguard Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Mai Managed Volatility

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mai Managed Volatility are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Mai Managed 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 Growth and Mai Managed

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

The idea behind Vanguard Growth Index and Mai Managed Volatility 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.