Correlation Between Vanguard Mega and Astor Longshort

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

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

Diversification Opportunities for Vanguard Mega and Astor Longshort

-0.1

Correlation Coefficient

Vanguard Mega  Astor Longshort

Good diversification

The 3 months correlation between Vanguard and Astor is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mega Cap and Astor Longshort Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astor Longshort and Vanguard Mega 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 Mega Cap are associated (or correlated) with Astor Longshort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astor Longshort has no effect on the direction of Vanguard Mega i.e., Vanguard Mega and Astor Longshort go up and down completely randomly.

Pair Corralation between Vanguard Mega and Astor Longshort

Assuming the 90 days horizon Vanguard Mega Cap is expected to generate 1.93 times more return on investment than Astor Longshort. However, Vanguard Mega is 1.93 times more volatile than Astor Longshort Fund. It trades about 0.13 of its potential returns per unit of risk. Astor Longshort Fund is currently generating about 0.05 per unit of risk. If you would invest  37,521  in Vanguard Mega Cap on October 5, 2024 and sell it today you would earn a total of  30,493  from holding Vanguard Mega Cap or generate 81.27% return on investment over 90 days.

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

Vanguard Mega Cap  vs.  Astor Longshort Fund

Vanguard Mega Cap

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Mega Cap 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 Mega may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Astor Longshort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astor Longshort Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward 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 Mega and Astor Longshort

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

The idea behind Vanguard Mega Cap and Astor Longshort Fund 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 Transaction History module to view history of all your transactions and understand their impact on performance.