Correlation Between Vanguard Funds and Deka MSCI

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

Diversification Opportunities for Vanguard Funds and Deka MSCI

0.99

Correlation Coefficient

Vanguard Funds  Deka MSCI

No risk reduction

The 3 months correlation between Vanguard and Deka is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Funds Public and Deka MSCI World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deka MSCI World 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 Deka MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deka MSCI World has no effect on the direction of Vanguard Funds i.e., Vanguard Funds and Deka MSCI go up and down completely randomly.

Pair Corralation between Vanguard Funds and Deka MSCI

Assuming the 90 days trading horizon Vanguard Funds Public is expected to generate 1.23 times more return on investment than Deka MSCI. However, Vanguard Funds is 1.23 times more volatile than Deka MSCI World. It trades about 0.19 of its potential returns per unit of risk. Deka MSCI World is currently generating about 0.19 per unit of risk. If you would invest  9,735  in Vanguard Funds Public on September 30, 2024 and sell it today you would earn a total of  1,080  from holding Vanguard Funds Public or generate 11.09% return on investment over 90 days.

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

Vanguard Funds Public  vs.  Deka MSCI World

Vanguard Funds Public

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Funds Public are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Vanguard Funds may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Deka MSCI World

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deka MSCI World are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Deka MSCI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vanguard Funds and Deka MSCI

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

The idea behind Vanguard Funds Public and Deka MSCI World 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.