Correlation Between Vanguard Total and Elkhorn

Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Elkhorn 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 Elkhorn 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 Elkhorn, you can compare the effects of market volatilities on Vanguard Total and Elkhorn 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 Elkhorn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Elkhorn.

Diversification Opportunities for Vanguard Total and Elkhorn

0.0

Correlation Coefficient

Vanguard Total  Elkhorn

Pay attention - limited upside

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

Pair Corralation between Vanguard Total and Elkhorn

If you would invest  23,540  in Vanguard Total Stock on September 19, 2024 and sell it today you would earn a total of  6,467  from holding Vanguard Total Stock or generate 27.47% return on investment over 90 days.

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

Vanguard Total Stock  vs.  Elkhorn

Vanguard Total Stock

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Vanguard Total may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Elkhorn

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Vanguard Total and Elkhorn

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

The idea behind Vanguard Total Stock and Elkhorn 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.