Correlation Between Vanguard Strategic and Blackrock

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

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

Diversification Opportunities for Vanguard Strategic and Blackrock

0.84

Correlation Coefficient

Vanguard Strategic  Blackrock

Very poor diversification

The 3 months correlation between Vanguard and Blackrock is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Strategic Equity and Blackrock Sm Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Sm Cap and Vanguard Strategic 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 Strategic Equity are associated (or correlated) with Blackrock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Sm Cap has no effect on the direction of Vanguard Strategic i.e., Vanguard Strategic and Blackrock go up and down completely randomly.

Pair Corralation between Vanguard Strategic and Blackrock

Assuming the 90 days horizon Vanguard Strategic Equity is expected to generate 0.95 times more return on investment than Blackrock. However, Vanguard Strategic Equity is 1.05 times less risky than Blackrock. It trades about -0.09 of its potential returns per unit of risk. Blackrock Sm Cap is currently generating about -0.12 per unit of risk. If you would invest  3,614  in Vanguard Strategic Equity on December 30, 2024 and sell it today you would lose (239.00) from holding Vanguard Strategic Equity or give up 6.61% of portfolio value over 90 days.

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

Vanguard Strategic Equity  vs.  Blackrock Sm Cap

Vanguard Strategic Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Strategic Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Blackrock Sm Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackrock Sm Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Vanguard Strategic and Blackrock

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

The idea behind Vanguard Strategic Equity and Blackrock Sm 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.