Correlation Between Vanguard Growth and Avantis Real

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

By analyzing existing cross correlation between Vanguard Growth Index and Avantis Real Estate, you can compare the effects of market volatilities on Vanguard Growth and Avantis Real 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 Growth with a short position of Avantis Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Growth and Avantis Real.

Diversification Opportunities for Vanguard Growth and Avantis Real

-0.07

Correlation Coefficient

Vanguard Growth  Avantis Real

Good diversification

The 3 months correlation between Vanguard and Avantis is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index and Avantis Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Real Estate and Vanguard Growth 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 Growth Index are associated (or correlated) with Avantis Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Real Estate has no effect on the direction of Vanguard Growth i.e., Vanguard Growth and Avantis Real go up and down completely randomly.

Pair Corralation between Vanguard Growth and Avantis Real

Considering the 90-day investment horizon Vanguard Growth Index is expected to generate 1.29 times more return on investment than Avantis Real. However, Vanguard Growth is 1.29 times more volatile than Avantis Real Estate. It trades about 0.06 of its potential returns per unit of risk. Avantis Real Estate is currently generating about 0.04 per unit of risk. If you would invest  33,588  in Vanguard Growth Index on December 4, 2024 and sell it today you would earn a total of  5,998  from holding Vanguard Growth Index or generate 17.86% return on investment over 90 days.

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

Vanguard Growth Index  vs.  Avantis Real Estate

Vanguard Growth Index

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Growth Index has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vanguard Growth is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Avantis Real Estate

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Vanguard Growth and Avantis Real

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

The idea behind Vanguard Growth Index and Avantis Real Estate 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.