Correlation Between Vanguard Growth and UST Inc

Can any of the company-specific risk be diversified away by investing in both Vanguard Growth and UST Inc 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 UST Inc 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 ProShares Ultra 7 10, you can compare the effects of market volatilities on Vanguard Growth and UST Inc 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 UST Inc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Growth and UST Inc.

Diversification Opportunities for Vanguard Growth and UST Inc

0.03

Correlation Coefficient

Vanguard Growth  UST Inc

Significant diversification

The 3 months correlation between Vanguard and UST is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index and ProShares Ultra 7 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra 7 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 UST Inc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra 7 has no effect on the direction of Vanguard Growth i.e., Vanguard Growth and UST Inc go up and down completely randomly.

Pair Corralation between Vanguard Growth and UST Inc

Considering the 90-day investment horizon Vanguard Growth Index is expected to generate 1.4 times more return on investment than UST Inc. However, Vanguard Growth is 1.4 times more volatile than ProShares Ultra 7 10. It trades about 0.0 of its potential returns per unit of risk. ProShares Ultra 7 10 is currently generating about 0.0 per unit of risk. If you would invest  40,861  in Vanguard Growth Index on November 28, 2024 and sell it today you would lose (127.00) from holding Vanguard Growth Index or give up 0.31% of portfolio value over 90 days.

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

Vanguard Growth Index  vs.  ProShares Ultra 7 10

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.

ProShares Ultra 7

Risk-Adjusted Performance

Weak

Over the last 90 days ProShares Ultra 7 10 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, UST Inc is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Vanguard Growth and UST Inc

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

The idea behind Vanguard Growth Index and ProShares Ultra 7 10 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.