Correlation Between Vanguard Funds and Benchmark Electronics

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

Diversification Opportunities for Vanguard Funds and Benchmark Electronics

0.7

Correlation Coefficient

Vanguard Funds  Benchmark Electronics

Poor diversification

The 3 months correlation between Vanguard and Benchmark is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Funds Public and Benchmark Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benchmark Electronics 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 Benchmark Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benchmark Electronics has no effect on the direction of Vanguard Funds i.e., Vanguard Funds and Benchmark Electronics go up and down completely randomly.

Pair Corralation between Vanguard Funds and Benchmark Electronics

Assuming the 90 days trading horizon Vanguard Funds Public is expected to generate 0.47 times more return on investment than Benchmark Electronics. However, Vanguard Funds Public is 2.14 times less risky than Benchmark Electronics. It trades about -0.1 of its potential returns per unit of risk. Benchmark Electronics is currently generating about -0.12 per unit of risk. If you would invest  10,717  in Vanguard Funds Public on December 30, 2024 and sell it today you would lose (706.00) from holding Vanguard Funds Public or give up 6.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Vanguard Funds Public  vs.  Benchmark Electronics

Vanguard Funds Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Funds Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Benchmark Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Benchmark Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Vanguard Funds and Benchmark Electronics

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

The idea behind Vanguard Funds Public and Benchmark Electronics 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.