Correlation Between Vanguard Growth and Return Stacked

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

Diversification Opportunities for Vanguard Growth and Return Stacked

-0.21

Correlation Coefficient

Vanguard Growth  Return Stacked

Very good diversification

The 3 months correlation between Vanguard and Return is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index and Return Stacked Bonds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Return Stacked Bonds 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 Return Stacked. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Return Stacked Bonds has no effect on the direction of Vanguard Growth i.e., Vanguard Growth and Return Stacked go up and down completely randomly.

Pair Corralation between Vanguard Growth and Return Stacked

Considering the 90-day investment horizon Vanguard Growth Index is expected to generate 1.1 times more return on investment than Return Stacked. However, Vanguard Growth is 1.1 times more volatile than Return Stacked Bonds. It trades about -0.02 of its potential returns per unit of risk. Return Stacked Bonds is currently generating about -0.04 per unit of risk. If you would invest  41,234  in Vanguard Growth Index on December 1, 2024 and sell it today you would lose (661.00) from holding Vanguard Growth Index or give up 1.6% of portfolio value over 90 days.

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

Vanguard Growth Index  vs.  Return Stacked Bonds

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.

Return Stacked Bonds

Risk-Adjusted Performance

Very Weak

Over the last 90 days Return Stacked Bonds has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Return Stacked is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Growth and Return Stacked

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

The idea behind Vanguard Growth Index and Return Stacked Bonds 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.