Correlation Between Vanguard Funds and Renaissance Europe

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

By analyzing existing cross correlation between Vanguard Funds Public and Renaissance Europe C, you can compare the effects of market volatilities on Vanguard Funds and Renaissance Europe 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 Funds with a short position of Renaissance Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Funds and Renaissance Europe.

Diversification Opportunities for Vanguard Funds and Renaissance Europe

-0.63

Correlation Coefficient

Vanguard Funds  Renaissance Europe

Excellent diversification

The 3 months correlation between Vanguard and Renaissance is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Funds Public and Renaissance Europe C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renaissance Europe and Vanguard Funds 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 Funds Public are associated (or correlated) with Renaissance Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renaissance Europe has no effect on the direction of Vanguard Funds i.e., Vanguard Funds and Renaissance Europe go up and down completely randomly.

Pair Corralation between Vanguard Funds and Renaissance Europe

Assuming the 90 days trading horizon Vanguard Funds Public is expected to generate 0.96 times more return on investment than Renaissance Europe. However, Vanguard Funds Public is 1.04 times less risky than Renaissance Europe. It trades about 0.11 of its potential returns per unit of risk. Renaissance Europe C is currently generating about 0.03 per unit of risk. If you would invest  6,998  in Vanguard Funds Public on October 5, 2024 and sell it today you would earn a total of  3,752  from holding Vanguard Funds Public or generate 53.62% return on investment over 90 days.

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

Vanguard Funds Public  vs.  Renaissance Europe C

Vanguard Funds Public

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Vanguard Funds Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly unsteady basic indicators, Vanguard Funds may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Renaissance Europe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Renaissance Europe C has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Renaissance Europe is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Funds and Renaissance Europe

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

The idea behind Vanguard Funds Public and Renaissance Europe C 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.