Correlation Between Vanguard Growth and Defiance ETFs

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

Diversification Opportunities for Vanguard Growth and Defiance ETFs

0.76

Correlation Coefficient

Vanguard Growth  Defiance ETFs

Poor diversification

The 3 months correlation between Vanguard and Defiance is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index and Defiance ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defiance ETFs 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 Defiance ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defiance ETFs has no effect on the direction of Vanguard Growth i.e., Vanguard Growth and Defiance ETFs go up and down completely randomly.

Pair Corralation between Vanguard Growth and Defiance ETFs

If you would invest  39,964  in Vanguard Growth Index on September 17, 2024 and sell it today you would earn a total of  2,836  from holding Vanguard Growth Index or generate 7.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	0.0%
Values	Daily Returns

Vanguard Growth Index  vs.  Defiance ETFs

Vanguard Growth Index

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Growth Index are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Vanguard Growth reported solid returns over the last few months and may actually be approaching a breakup point.

Defiance ETFs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Defiance ETFs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Defiance ETFs is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Growth and Defiance ETFs

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

The idea behind Vanguard Growth Index and Defiance ETFs 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.