Correlation Between Vanguard Total and Barclays Capital

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

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

Diversification Opportunities for Vanguard Total and Barclays Capital

0.61

Correlation Coefficient

Vanguard Total  Barclays Capital

Poor diversification

The 3 months correlation between Vanguard and Barclays is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and Barclays Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays Capital and Vanguard Total 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 Total Stock are associated (or correlated) with Barclays Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays Capital has no effect on the direction of Vanguard Total i.e., Vanguard Total and Barclays Capital go up and down completely randomly.

Pair Corralation between Vanguard Total and Barclays Capital

Considering the 90-day investment horizon Vanguard Total Stock is expected to generate 0.77 times more return on investment than Barclays Capital. However, Vanguard Total Stock is 1.29 times less risky than Barclays Capital. It trades about 0.11 of its potential returns per unit of risk. Barclays Capital is currently generating about 0.0 per unit of risk. If you would invest  19,306  in Vanguard Total Stock on October 11, 2024 and sell it today you would earn a total of  9,862  from holding Vanguard Total Stock or generate 51.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	19.6%
Values	Daily Returns

Vanguard Total Stock  vs.  Barclays Capital

Vanguard Total Stock

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Vanguard Total is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Barclays Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barclays Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking indicators, Barclays Capital is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Vanguard Total and Barclays Capital

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

The idea behind Vanguard Total Stock and Barclays Capital 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.