Correlation Between Vanguard Total and Sgi Peak

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

Diversification Opportunities for Vanguard Total and Sgi Peak

0.38

Correlation Coefficient

Vanguard Total  Sgi Peak

Weak diversification

The 3 months correlation between Vanguard and Sgi is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and Sgi Peak Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sgi Peak Growth 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 Sgi Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sgi Peak Growth has no effect on the direction of Vanguard Total i.e., Vanguard Total and Sgi Peak go up and down completely randomly.

Pair Corralation between Vanguard Total and Sgi Peak

Assuming the 90 days horizon Vanguard Total Stock is expected to generate 0.5 times more return on investment than Sgi Peak. However, Vanguard Total Stock is 2.02 times less risky than Sgi Peak. It trades about -0.13 of its potential returns per unit of risk. Sgi Peak Growth is currently generating about -0.29 per unit of risk. If you would invest  14,578  in Vanguard Total Stock on October 9, 2024 and sell it today you would lose (394.00) from holding Vanguard Total Stock or give up 2.7% of portfolio value over 90 days.

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

Vanguard Total Stock  vs.  Sgi Peak Growth

Vanguard Total Stock

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sgi Peak Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sgi Peak Growth 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 Total and Sgi Peak

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

The idea behind Vanguard Total Stock and Sgi Peak Growth 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.