Correlation Between Vanguard Industrials and Vanguard Funds

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

By analyzing existing cross correlation between Vanguard Industrials ETF and Vanguard Funds Public, you can compare the effects of market volatilities on Vanguard Industrials and Vanguard Funds 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 Industrials with a short position of Vanguard Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Industrials and Vanguard Funds.

Diversification Opportunities for Vanguard Industrials and Vanguard Funds

0.71

Correlation Coefficient

Vanguard Industrials  Vanguard Funds

Poor diversification

The 3 months correlation between Vanguard and Vanguard is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Industrials ETF and Vanguard Funds Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Funds Public and Vanguard Industrials 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 Industrials ETF are associated (or correlated) with Vanguard Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Funds Public has no effect on the direction of Vanguard Industrials i.e., Vanguard Industrials and Vanguard Funds go up and down completely randomly.

Pair Corralation between Vanguard Industrials and Vanguard Funds

Assuming the 90 days trading horizon Vanguard Industrials ETF is expected to generate 1.11 times more return on investment than Vanguard Funds. However, Vanguard Industrials is 1.11 times more volatile than Vanguard Funds Public. It trades about 0.28 of its potential returns per unit of risk. Vanguard Funds Public is currently generating about 0.06 per unit of risk. If you would invest  477,082  in Vanguard Industrials ETF on September 2, 2024 and sell it today you would earn a total of  94,985  from holding Vanguard Industrials ETF or generate 19.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Vanguard Industrials ETF  vs.  Vanguard Funds Public

Vanguard Industrials ETF

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Industrials ETF are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Vanguard Industrials showed solid returns over the last few months and may actually be approaching a breakup point.

Vanguard Funds Public

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Funds Public are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Vanguard Funds is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Industrials and Vanguard Funds

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

The idea behind Vanguard Industrials ETF and Vanguard Funds Public 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.