Correlation Between Vanguard Short and Cargile Fund

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

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

Diversification Opportunities for Vanguard Short and Cargile Fund

0.01

Correlation Coefficient

Vanguard Short  Cargile Fund

Significant diversification

The 3 months correlation between Vanguard and Cargile is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Short Term Government and Cargile Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cargile Fund and Vanguard Short 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 Short Term Government are associated (or correlated) with Cargile Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cargile Fund has no effect on the direction of Vanguard Short i.e., Vanguard Short and Cargile Fund go up and down completely randomly.

Pair Corralation between Vanguard Short and Cargile Fund

Assuming the 90 days horizon Vanguard Short Term Government is expected to generate 0.23 times more return on investment than Cargile Fund. However, Vanguard Short Term Government is 4.31 times less risky than Cargile Fund. It trades about -0.05 of its potential returns per unit of risk. Cargile Fund is currently generating about -0.03 per unit of risk. If you would invest  2,441  in Vanguard Short Term Government on October 6, 2024 and sell it today you would lose (5.00) from holding Vanguard Short Term Government or give up 0.2% of portfolio value over 90 days.

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

Vanguard Short Term Government  vs.  Cargile Fund

Vanguard Short Term

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Short Term Government has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Vanguard Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cargile Fund

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cargile Fund are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Cargile Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Short and Cargile Fund

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

The idea behind Vanguard Short Term Government and Cargile 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.