Correlation Between Vanguard Total and Cahxx

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

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

Diversification Opportunities for Vanguard Total and Cahxx

-0.57

Correlation Coefficient

Vanguard Total  Cahxx

Excellent diversification

The 3 months correlation between Vanguard and Cahxx is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and Cahxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cahxx and Vanguard Total 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 Total Stock are associated (or correlated) with Cahxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cahxx has no effect on the direction of Vanguard Total i.e., Vanguard Total and Cahxx go up and down completely randomly.

Pair Corralation between Vanguard Total and Cahxx

Assuming the 90 days horizon Vanguard Total Stock is expected to under-perform the Cahxx. But the mutual fund apears to be less risky and, when comparing its historical volatility, Vanguard Total Stock is 112.23 times less risky than Cahxx. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Cahxx is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  100.00  in Cahxx on October 11, 2024 and sell it today you would earn a total of  0.00  from holding Cahxx or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Vanguard Total Stock  vs.  Cahxx

Vanguard Total Stock

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cahxx

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cahxx are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Cahxx showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vanguard Total and Cahxx

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

The idea behind Vanguard Total Stock and Cahxx 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.