Correlation Between Ing Senior and Vanguard Total

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

By analyzing existing cross correlation between Ing Senior Incm and Vanguard Total Stock, you can compare the effects of market volatilities on Ing Senior and Vanguard Total 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 Ing Senior with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ing Senior and Vanguard Total.

Diversification Opportunities for Ing Senior and Vanguard Total

0.82

Correlation Coefficient

Ing Senior  Vanguard Total

Very poor diversification

The 3 months correlation between Ing and Vanguard is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Ing Senior Incm and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock and Ing Senior 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 Ing Senior Incm are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of Ing Senior i.e., Ing Senior and Vanguard Total go up and down completely randomly.

Pair Corralation between Ing Senior and Vanguard Total

Assuming the 90 days horizon Ing Senior is expected to generate 2.74 times less return on investment than Vanguard Total. But when comparing it to its historical volatility, Ing Senior Incm is 3.5 times less risky than Vanguard Total. It trades about 0.15 of its potential returns per unit of risk. Vanguard Total Stock is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  9,181  in Vanguard Total Stock on September 28, 2024 and sell it today you would earn a total of  5,290  from holding Vanguard Total Stock or generate 57.62% return on investment over 90 days.

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

Ing Senior Incm  vs.  Vanguard Total Stock

Ing Senior Incm

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ing Senior Incm are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ing Senior is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Total Stock

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ing Senior and Vanguard Total

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

The idea behind Ing Senior Incm and Vanguard Total Stock 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.

Check out your portfolio center.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.