Correlation Between Vanguard Information and Eventide Exponential

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

By analyzing existing cross correlation between Vanguard Information Technology and Eventide Exponential Technologies, you can compare the effects of market volatilities on Vanguard Information and Eventide Exponential 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 Information with a short position of Eventide Exponential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Information and Eventide Exponential.

Diversification Opportunities for Vanguard Information and Eventide Exponential

0.94

Correlation Coefficient

Vanguard Information  Eventide Exponential

Almost no diversification

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

Pair Corralation between Vanguard Information and Eventide Exponential

Assuming the 90 days horizon Vanguard Information Technology is expected to under-perform the Eventide Exponential. But the mutual fund apears to be less risky and, when comparing its historical volatility, Vanguard Information Technology is 1.04 times less risky than Eventide Exponential. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Eventide Exponential Technologies is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  1,336  in Eventide Exponential Technologies on December 30, 2024 and sell it today you would lose (168.00) from holding Eventide Exponential Technologies or give up 12.57% of portfolio value over 90 days.

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

Vanguard Information Technolog  vs.  Eventide Exponential Technolog

Vanguard Information

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Information Technology has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Eventide Exponential

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eventide Exponential Technologies has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Vanguard Information and Eventide Exponential

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

The idea behind Vanguard Information Technology and Eventide Exponential Technologies 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.