Correlation Between Vanguard Global and Vanguard Strategic

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

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

Diversification Opportunities for Vanguard Global and Vanguard Strategic

0.69

Correlation Coefficient

Vanguard Global  Vanguard Strategic

Poor diversification

The 3 months correlation between Vanguard and Vanguard is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Global Minimum and Vanguard Strategic Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Strategic and Vanguard Global 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 Global Minimum are associated (or correlated) with Vanguard Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Strategic has no effect on the direction of Vanguard Global i.e., Vanguard Global and Vanguard Strategic go up and down completely randomly.

Pair Corralation between Vanguard Global and Vanguard Strategic

Assuming the 90 days horizon Vanguard Global Minimum is expected to under-perform the Vanguard Strategic. But the mutual fund apears to be less risky and, when comparing its historical volatility, Vanguard Global Minimum is 2.07 times less risky than Vanguard Strategic. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Vanguard Strategic Small Cap is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,593  in Vanguard Strategic Small Cap on September 13, 2024 and sell it today you would earn a total of  41.00  from holding Vanguard Strategic Small Cap or generate 0.89% return on investment over 90 days.

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

Vanguard Global Minimum  vs.  Vanguard Strategic Small Cap

Vanguard Global Minimum

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Global Minimum are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Vanguard Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Strategic

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Strategic Small Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Vanguard Strategic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vanguard Global and Vanguard Strategic

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

The idea behind Vanguard Global Minimum and Vanguard Strategic Small Cap 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.