Correlation Between Vanguard Communication and 50249AAH6

Can any of the company-specific risk be diversified away by investing in both Vanguard Communication and 50249AAH6 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 Communication and 50249AAH6 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vanguard Communication Services and LYB INTERNATIONAL FINANCE, you can compare the effects of market volatilities on Vanguard Communication and 50249AAH6 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 Communication with a short position of 50249AAH6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Communication and 50249AAH6.

Diversification Opportunities for Vanguard Communication and 50249AAH6

-0.17

Correlation Coefficient

Vanguard Communication  50249AAH6

Good diversification

The 3 months correlation between Vanguard and 50249AAH6 is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Communication Service and LYB INTERNATIONAL FINANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LYB INTERNATIONAL FINANCE and Vanguard Communication 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 Communication Services are associated (or correlated) with 50249AAH6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LYB INTERNATIONAL FINANCE has no effect on the direction of Vanguard Communication i.e., Vanguard Communication and 50249AAH6 go up and down completely randomly.

Pair Corralation between Vanguard Communication and 50249AAH6

Considering the 90-day investment horizon Vanguard Communication is expected to generate 20.58 times less return on investment than 50249AAH6. But when comparing it to its historical volatility, Vanguard Communication Services is 45.77 times less risky than 50249AAH6. It trades about 0.1 of its potential returns per unit of risk. LYB INTERNATIONAL FINANCE is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  7,779  in LYB INTERNATIONAL FINANCE on October 23, 2024 and sell it today you would lose (254.00) from holding LYB INTERNATIONAL FINANCE or give up 3.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	79.55%
Values	Daily Returns

Vanguard Communication Service  vs.  LYB INTERNATIONAL FINANCE

Vanguard Communication

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Communication Services are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Vanguard Communication may actually be approaching a critical reversion point that can send shares even higher in February 2025.

LYB INTERNATIONAL FINANCE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LYB INTERNATIONAL FINANCE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 50249AAH6 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Communication and 50249AAH6

The main advantage of trading using opposite Vanguard Communication and 50249AAH6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Communication position performs unexpectedly, 50249AAH6 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 50249AAH6 will offset losses from the drop in 50249AAH6's long position.

The idea behind Vanguard Communication Services and LYB INTERNATIONAL FINANCE 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.