Correlation Between Vanguard and RiverFront Dynamic

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

By analyzing existing cross correlation between Vanguard SP 500 and RiverFront Dynamic Flex Cap, you can compare the effects of market volatilities on Vanguard and RiverFront Dynamic 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 with a short position of RiverFront Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and RiverFront Dynamic.

Diversification Opportunities for Vanguard and RiverFront Dynamic

0.0

Correlation Coefficient

Vanguard  RiverFront Dynamic

Pay attention - limited upside

The 3 months correlation between Vanguard and RiverFront is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP 500 and RiverFront Dynamic Flex Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiverFront Dynamic Flex and Vanguard 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 SP 500 are associated (or correlated) with RiverFront Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RiverFront Dynamic Flex has no effect on the direction of Vanguard i.e., Vanguard and RiverFront Dynamic go up and down completely randomly.

Pair Corralation between Vanguard and RiverFront Dynamic

If you would invest  51,574  in Vanguard SP 500 on September 14, 2024 and sell it today you would earn a total of  3,991  from holding Vanguard SP 500 or generate 7.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Vanguard SP 500  vs.  RiverFront Dynamic Flex Cap

Vanguard SP 500

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard SP 500 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Vanguard may actually be approaching a critical reversion point that can send shares even higher in January 2025.

RiverFront Dynamic Flex

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days RiverFront Dynamic Flex Cap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, RiverFront Dynamic is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Vanguard and RiverFront Dynamic

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

The idea behind Vanguard SP 500 and RiverFront Dynamic Flex 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.