Correlation Between Vanguard Russell and Capital Group

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

By analyzing existing cross correlation between Vanguard Russell 1000 and Capital Group Growth, you can compare the effects of market volatilities on Vanguard Russell and Capital Group 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 Russell with a short position of Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Russell and Capital Group.

Diversification Opportunities for Vanguard Russell and Capital Group

0.97

Correlation Coefficient

Vanguard Russell  Capital Group

Almost no diversification

The 3 months correlation between Vanguard and Capital is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Russell 1000 and Capital Group Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Growth and Vanguard Russell 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 Russell 1000 are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Growth has no effect on the direction of Vanguard Russell i.e., Vanguard Russell and Capital Group go up and down completely randomly.

Pair Corralation between Vanguard Russell and Capital Group

Given the investment horizon of 90 days Vanguard Russell is expected to generate 1.4 times less return on investment than Capital Group. But when comparing it to its historical volatility, Vanguard Russell 1000 is 1.0 times less risky than Capital Group. It trades about 0.11 of its potential returns per unit of risk. Capital Group Growth is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,505  in Capital Group Growth on October 23, 2024 and sell it today you would earn a total of  390.00  from holding Capital Group Growth or generate 11.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

Vanguard Russell 1000  vs.  Capital Group Growth

Vanguard Russell 1000

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Russell 1000 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Vanguard Russell may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Capital Group Growth

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Group Growth are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal technical and fundamental indicators, Capital Group may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Vanguard Russell and Capital Group

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

The idea behind Vanguard Russell 1000 and Capital Group Growth 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.